Correlation Between Magnetic Resources and Ainsworth Game
Can any of the company-specific risk be diversified away by investing in both Magnetic Resources and Ainsworth Game 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 Magnetic Resources and Ainsworth Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnetic Resources NL and Ainsworth Game Technology, you can compare the effects of market volatilities on Magnetic Resources and Ainsworth Game 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 Magnetic Resources with a short position of Ainsworth Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnetic Resources and Ainsworth Game.
Diversification Opportunities for Magnetic Resources and Ainsworth Game
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnetic and Ainsworth is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Magnetic Resources NL and Ainsworth Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainsworth Game Technology and Magnetic Resources 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 Magnetic Resources NL are associated (or correlated) with Ainsworth Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainsworth Game Technology has no effect on the direction of Magnetic Resources i.e., Magnetic Resources and Ainsworth Game go up and down completely randomly.
Pair Corralation between Magnetic Resources and Ainsworth Game
Assuming the 90 days trading horizon Magnetic Resources NL is expected to generate 1.27 times more return on investment than Ainsworth Game. However, Magnetic Resources is 1.27 times more volatile than Ainsworth Game Technology. It trades about 0.04 of its potential returns per unit of risk. Ainsworth Game Technology is currently generating about -0.01 per unit of risk. If you would invest 80.00 in Magnetic Resources NL on August 27, 2024 and sell it today you would earn a total of 45.00 from holding Magnetic Resources NL or generate 56.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnetic Resources NL vs. Ainsworth Game Technology
Performance |
| Timeline |
| Magnetic Resources |
| Ainsworth Game Technology |
Magnetic Resources and Ainsworth Game Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnetic Resources and Ainsworth Game
The main advantage of trading using opposite Magnetic Resources and Ainsworth Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnetic Resources position performs unexpectedly, Ainsworth Game 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 Ainsworth Game will offset losses from the drop in Ainsworth Game's long position.| Magnetic Resources vs. Ainsworth Game Technology | Magnetic Resources vs. Flagship Investments | Magnetic Resources vs. Platinum Asset Management | Magnetic Resources vs. Microequities Asset Management |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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