Correlation Between Games Workshop and Platinum Investment

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

Diversification Opportunities for Games Workshop and Platinum Investment

-0.53

Correlation Coefficient

Games Workshop  Platinum Investment

Excellent diversification

The 3 months correlation between Games and Platinum is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Games Workshop i.e., Games Workshop and Platinum Investment go up and down completely randomly.

Pair Corralation between Games Workshop and Platinum Investment

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.82 times more return on investment than Platinum Investment. However, Games Workshop Group is 1.22 times less risky than Platinum Investment. It trades about 0.17 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.01 per unit of risk. If you would invest  12,486  in Games Workshop Group on September 16, 2024 and sell it today you would earn a total of  4,274  from holding Games Workshop Group or generate 34.23% return on investment over 90 days.

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

Games Workshop Group  vs.  Platinum Investment Management

Games Workshop Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Platinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Platinum Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Games Workshop and Platinum Investment

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

The idea behind Games Workshop Group and Platinum Investment Management 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.