Correlation Between Ainsworth Game and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and Diageo PLC 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 Diageo PLC 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 Diageo PLC ADR, you can compare the effects of market volatilities on Ainsworth Game and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and Diageo PLC.
Diversification Opportunities for Ainsworth Game and Diageo PLC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ainsworth and Diageo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Diageo PLC go up and down completely randomly.
Pair Corralation between Ainsworth Game and Diageo PLC
Assuming the 90 days horizon Ainsworth Game Technology is expected to under-perform the Diageo PLC. In addition to that, Ainsworth Game is 1.57 times more volatile than Diageo PLC ADR. It trades about -0.21 of its total potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.16 per unit of volatility. If you would invest 12,416 in Diageo PLC ADR on September 1, 2024 and sell it today you would lose (480.00) from holding Diageo PLC ADR or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ainsworth Game Technology vs. Diageo PLC ADR
Performance |
| Timeline |
| Ainsworth Game Technology |
| Diageo PLC ADR |
Ainsworth Game and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ainsworth Game and Diageo PLC
The main advantage of trading using opposite Ainsworth Game and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ainsworth Game position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Ainsworth Game vs. Intema Solutions | Ainsworth Game vs. 888 Holdings | Ainsworth Game vs. Royal Wins | Ainsworth Game vs. Real Luck Group |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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