Correlation Between Catalyst Media and Games Workshop

Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Games Workshop 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 Catalyst Media and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catalyst Media Group and Games Workshop Group, you can compare the effects of market volatilities on Catalyst Media and Games Workshop 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 Catalyst Media with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Games Workshop.

Diversification Opportunities for Catalyst Media and Games Workshop

-0.09

Correlation Coefficient

Catalyst Media  Games Workshop

Good diversification

The 3 months correlation between Catalyst and Games is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and Catalyst Media 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 Catalyst Media Group are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Catalyst Media i.e., Catalyst Media and Games Workshop go up and down completely randomly.

Pair Corralation between Catalyst Media and Games Workshop

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the Games Workshop. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Media Group is 1.17 times less risky than Games Workshop. The stock trades about -0.05 of its potential returns per unit of risk. The Games Workshop Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  950,901  in Games Workshop Group on September 20, 2024 and sell it today you would earn a total of  404,099  from holding Games Workshop Group or generate 42.5% return on investment over 90 days.

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

Catalyst Media Group  vs.  Games Workshop Group

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Catalyst Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Games Workshop Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Games Workshop exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Media and Games Workshop

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

The idea behind Catalyst Media Group and Games Workshop Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.