Correlation Between Ainsworth Game and Patriot Lithium

Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and Patriot Lithium 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 Patriot Lithium 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 Patriot Lithium, you can compare the effects of market volatilities on Ainsworth Game and Patriot Lithium 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 Patriot Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and Patriot Lithium.

Diversification Opportunities for Ainsworth Game and Patriot Lithium

-0.62

Correlation Coefficient

Ainsworth Game  Patriot Lithium

Excellent diversification

The 3 months correlation between Ainsworth and Patriot is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Patriot Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Lithium 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 Patriot Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Lithium has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Patriot Lithium go up and down completely randomly.

Pair Corralation between Ainsworth Game and Patriot Lithium

Assuming the 90 days trading horizon Ainsworth Game Technology is expected to under-perform the Patriot Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Ainsworth Game Technology is 1.72 times less risky than Patriot Lithium. The stock trades about -0.07 of its potential returns per unit of risk. The Patriot Lithium is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Patriot Lithium on September 5, 2024 and sell it today you would lose (0.60) from holding Patriot Lithium or give up 12.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.85%
Values	Daily Returns

Ainsworth Game Technology  vs.  Patriot Lithium

Ainsworth Game Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ainsworth Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Patriot Lithium

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patriot Lithium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Patriot Lithium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ainsworth Game and Patriot Lithium

The main advantage of trading using opposite Ainsworth Game and Patriot Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ainsworth Game position performs unexpectedly, Patriot Lithium 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 Patriot Lithium will offset losses from the drop in Patriot Lithium's long position.

The idea behind Ainsworth Game Technology and Patriot Lithium pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.