Correlation Between Ainsworth Game and Tlou Energy

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

Diversification Opportunities for Ainsworth Game and Tlou Energy

0.7

Correlation Coefficient

Ainsworth Game  Tlou Energy

Poor diversification

The 3 months correlation between Ainsworth and Tlou is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Tlou Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tlou Energy 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 Tlou Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tlou Energy has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Tlou Energy go up and down completely randomly.

Pair Corralation between Ainsworth Game and Tlou Energy

Assuming the 90 days trading horizon Ainsworth Game is expected to generate 2.18 times less return on investment than Tlou Energy. But when comparing it to its historical volatility, Ainsworth Game Technology is 1.2 times less risky than Tlou Energy. It trades about 0.01 of its potential returns per unit of risk. Tlou Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Tlou Energy on July 3, 2024 and sell it today you would earn a total of  0.30  from holding Tlou Energy or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ainsworth Game Technology  vs.  Tlou Energy

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.

Tlou Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tlou Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ainsworth Game and Tlou Energy

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

The idea behind Ainsworth Game Technology and Tlou Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.