Correlation Between Gaming Realms and Games Workshop

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Can any of the company-specific risk be diversified away by investing in both Gaming Realms 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 Gaming Realms and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Games Workshop Group, you can compare the effects of market volatilities on Gaming Realms 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 Gaming Realms with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Games Workshop.

Diversification Opportunities for Gaming Realms and Games Workshop

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gaming and Games is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc 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 Gaming Realms 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 Gaming Realms plc 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 Gaming Realms i.e., Gaming Realms and Games Workshop go up and down completely randomly.

Pair Corralation between Gaming Realms and Games Workshop

Assuming the 90 days trading horizon Gaming Realms plc is expected to under-perform the Games Workshop. In addition to that, Gaming Realms is 1.07 times more volatile than Games Workshop Group. It trades about -0.05 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.18 per unit of volatility. If you would invest  1,043,562  in Games Workshop Group on September 20, 2024 and sell it today you would earn a total of  311,438  from holding Games Workshop Group or generate 29.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gaming Realms plc  vs.  Games Workshop Group

 Performance 
       Timeline  
Gaming Realms plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Games Workshop Group 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
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.

Gaming Realms and Games Workshop Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gaming Realms and Games Workshop

The main advantage of trading using opposite Gaming Realms and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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 Gaming Realms plc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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