Correlation Between Games Workshop and PRECISION DRILLING

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

Diversification Opportunities for Games Workshop and PRECISION DRILLING

0.21

Correlation Coefficient

Games Workshop  PRECISION DRILLING

Modest diversification

The 3 months correlation between Games and PRECISION is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING 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 PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of Games Workshop i.e., Games Workshop and PRECISION DRILLING go up and down completely randomly.

Pair Corralation between Games Workshop and PRECISION DRILLING

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.94 times more return on investment than PRECISION DRILLING. However, Games Workshop Group is 1.06 times less risky than PRECISION DRILLING. It trades about 0.09 of its potential returns per unit of risk. PRECISION DRILLING P is currently generating about -0.05 per unit of risk. If you would invest  12,351  in Games Workshop Group on September 23, 2024 and sell it today you would earn a total of  3,339  from holding Games Workshop Group or generate 27.03% return on investment over 90 days.

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

Games Workshop Group  vs.  PRECISION DRILLING P

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.

PRECISION DRILLING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PRECISION DRILLING P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental 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 Games Workshop and PRECISION DRILLING

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

The idea behind Games Workshop Group and PRECISION DRILLING P 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.