Correlation Between Ainsworth Game and Encounter Resources
Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and Encounter Resources 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 Encounter Resources 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 Encounter Resources, you can compare the effects of market volatilities on Ainsworth Game and Encounter Resources 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 Encounter Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and Encounter Resources.
Diversification Opportunities for Ainsworth Game and Encounter Resources
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ainsworth and Encounter is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Encounter Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encounter Resources 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 Encounter Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encounter Resources has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Encounter Resources go up and down completely randomly.
Pair Corralation between Ainsworth Game and Encounter Resources
Assuming the 90 days trading horizon Ainsworth Game Technology is expected to under-perform the Encounter Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ainsworth Game Technology is 2.2 times less risky than Encounter Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Encounter Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Encounter Resources on September 1, 2024 and sell it today you would earn a total of 21.00 from holding Encounter Resources or generate 131.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ainsworth Game Technology vs. Encounter Resources
Performance |
| Timeline |
| Ainsworth Game Technology |
| Encounter Resources |
Ainsworth Game and Encounter Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ainsworth Game and Encounter Resources
The main advantage of trading using opposite Ainsworth Game and Encounter Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ainsworth Game position performs unexpectedly, Encounter Resources 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 Encounter Resources will offset losses from the drop in Encounter Resources' long position.| Ainsworth Game vs. G8 Education | Ainsworth Game vs. Richmond Vanadium Technology | Ainsworth Game vs. Charter Hall Education | Ainsworth Game vs. Queste Communications |
| Encounter Resources vs. Kingsrose Mining | Encounter Resources vs. Truscott Mining Corp | Encounter Resources vs. Ainsworth Game Technology | Encounter Resources vs. Talisman Mining |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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