Correlation Between Ainsworth Game and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and Commonwealth Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ainsworth Game and Commonwealth Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ainsworth Game Technology and Commonwealth Bank, you can compare the effects of market volatilities on Ainsworth Game and Commonwealth Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ainsworth Game with a short position of Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and Commonwealth Bank.
Diversification Opportunities for Ainsworth Game and Commonwealth Bank
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ainsworth and Commonwealth is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Commonwealth Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Ainsworth Game is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ainsworth Game Technology are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Ainsworth Game and Commonwealth Bank
Assuming the 90 days trading horizon Ainsworth Game is expected to generate 2.61 times less return on investment than Commonwealth Bank. In addition to that, Ainsworth Game is 2.05 times more volatile than Commonwealth Bank. It trades about 0.06 of its total potential returns per unit of risk. Commonwealth Bank is currently generating about 0.3 per unit of volatility. If you would invest 14,417 in Commonwealth Bank on August 30, 2024 and sell it today you would earn a total of 1,340 from holding Commonwealth Bank or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ainsworth Game Technology vs. Commonwealth Bank
Performance |
| Timeline |
| Ainsworth Game Technology |
| Commonwealth Bank |
Ainsworth Game and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ainsworth Game and Commonwealth Bank
The main advantage of trading using opposite Ainsworth Game and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ainsworth Game position performs unexpectedly, Commonwealth Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| Ainsworth Game vs. Greenvale Energy | Ainsworth Game vs. Summit Resources Limited | Ainsworth Game vs. Ecofibre | Ainsworth Game vs. iShares Global Healthcare |
| Commonwealth Bank vs. Treasury Wine Estates | Commonwealth Bank vs. Iron Road | Commonwealth Bank vs. EMvision Medical Devices | Commonwealth Bank vs. Aussie Broadband |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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