Correlation Between Lake Resources and Ainsworth Game

Can any of the company-specific risk be diversified away by investing in both Lake 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 Lake 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 Lake Resources NL and Ainsworth Game Technology, you can compare the effects of market volatilities on Lake 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 Lake Resources with a short position of Ainsworth Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Ainsworth Game.

Diversification Opportunities for Lake Resources and Ainsworth Game

-0.65

Correlation Coefficient

Lake Resources  Ainsworth Game

Excellent diversification

The 3 months correlation between Lake and Ainsworth is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lake 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 Lake 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 Lake 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 Lake Resources i.e., Lake Resources and Ainsworth Game go up and down completely randomly.

Pair Corralation between Lake Resources and Ainsworth Game

Assuming the 90 days trading horizon Lake Resources NL is expected to under-perform the Ainsworth Game. In addition to that, Lake Resources is 1.09 times more volatile than Ainsworth Game Technology. It trades about -0.43 of its total potential returns per unit of risk. Ainsworth Game Technology is currently generating about 0.11 per unit of volatility. If you would invest  70.00  in Ainsworth Game Technology on September 5, 2024 and sell it today you would earn a total of  4.00  from holding Ainsworth Game Technology or generate 5.71% return on investment over 90 days.

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

Lake Resources NL  vs.  Ainsworth Game Technology

Lake Resources NL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Resources NL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Lake Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Lake Resources and Ainsworth Game

The main advantage of trading using opposite Lake Resources and Ainsworth Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake 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.

The idea behind Lake Resources NL and Ainsworth Game Technology 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.