Correlation Between Superior Drilling and Ainsworth Game

Can any of the company-specific risk be diversified away by investing in both Superior Drilling 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 Superior Drilling and Ainsworth Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Drilling Products and Ainsworth Game Technology, you can compare the effects of market volatilities on Superior Drilling 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 Superior Drilling with a short position of Ainsworth Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Drilling and Ainsworth Game.

Diversification Opportunities for Superior Drilling and Ainsworth Game

-0.74

Correlation Coefficient

Superior Drilling  Ainsworth Game

Pay attention - limited upside

The 3 months correlation between Superior and Ainsworth is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Superior Drilling Products 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 Superior Drilling 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 Superior Drilling Products 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 Superior Drilling i.e., Superior Drilling and Ainsworth Game go up and down completely randomly.

Pair Corralation between Superior Drilling and Ainsworth Game

Given the investment horizon of 90 days Superior Drilling Products is expected to generate 2.24 times more return on investment than Ainsworth Game. However, Superior Drilling is 2.24 times more volatile than Ainsworth Game Technology. It trades about 0.55 of its potential returns per unit of risk. Ainsworth Game Technology is currently generating about -0.15 per unit of risk. If you would invest  92.00  in Superior Drilling Products on January 31, 2024 and sell it today you would earn a total of  42.00  from holding Superior Drilling Products or generate 45.65% return on investment over 90 days.

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

Superior Drilling Products  vs.  Ainsworth Game Technology

Superior Drilling

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Drilling Products are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Superior Drilling demonstrated 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. 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.

Pair Trading with Superior Drilling and Ainsworth Game

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

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.