Correlation Between Games Workshop and COMMERCIAL VEHICLE

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

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

Diversification Opportunities for Games Workshop and COMMERCIAL VEHICLE

-0.77

Correlation Coefficient

Games Workshop  COMMERCIAL VEHICLE

Pay attention - limited upside

The 3 months correlation between Games and COMMERCIAL is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE and Games Workshop 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 Games Workshop Group are associated (or correlated) with COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of Games Workshop i.e., Games Workshop and COMMERCIAL VEHICLE go up and down completely randomly.

Pair Corralation between Games Workshop and COMMERCIAL VEHICLE

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.61 times more return on investment than COMMERCIAL VEHICLE. However, Games Workshop Group is 1.64 times less risky than COMMERCIAL VEHICLE. It trades about 0.13 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.11 per unit of risk. If you would invest  12,526  in Games Workshop Group on September 24, 2024 and sell it today you would earn a total of  3,164  from holding Games Workshop Group or generate 25.26% return on investment over 90 days.

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

Games Workshop Group  vs.  COMMERCIAL VEHICLE

Games Workshop Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

COMMERCIAL VEHICLE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMMERCIAL VEHICLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Games Workshop and COMMERCIAL VEHICLE

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

The idea behind Games Workshop Group and COMMERCIAL VEHICLE 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.