Correlation Between Ainsworth Game and Salesforce

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

Diversification Opportunities for Ainsworth Game and Salesforce

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ainsworth and Salesforce is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Salesforce go up and down completely randomly.

Pair Corralation between Ainsworth Game and Salesforce

Assuming the 90 days horizon Ainsworth Game Technology is expected to generate 0.69 times more return on investment than Salesforce. However, Ainsworth Game Technology is 1.45 times less risky than Salesforce. It trades about -0.25 of its potential returns per unit of risk. Salesforce is currently generating about -0.27 per unit of risk. If you would invest  86.00  in Ainsworth Game Technology on January 20, 2024 and sell it today you would lose (6.00) from holding Ainsworth Game Technology or give up 6.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Ainsworth Game Technology  vs.  Salesforce

 Performance 
       Timeline  
Ainsworth Game Technology 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Ainsworth Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Salesforce 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ainsworth Game and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ainsworth Game and Salesforce

The main advantage of trading using opposite Ainsworth Game and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ainsworth Game position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.
The idea behind Ainsworth Game Technology and Salesforce 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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