Correlation Between Aeorema Communications and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications 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 Aeorema Communications and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Games Workshop Group, you can compare the effects of market volatilities on Aeorema Communications 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 Aeorema Communications with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Games Workshop.
Diversification Opportunities for Aeorema Communications and Games Workshop
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aeorema and Games is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications 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 Aeorema Communications 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 Aeorema Communications 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 Aeorema Communications i.e., Aeorema Communications and Games Workshop go up and down completely randomly.
Pair Corralation between Aeorema Communications and Games Workshop
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Games Workshop. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 2.02 times less risky than Games Workshop. The stock trades about -0.17 of its potential returns per unit of risk. The Games Workshop Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,330,472 in Games Workshop Group on December 11, 2024 and sell it today you would earn a total of 107,528 from holding Games Workshop Group or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Games Workshop Group
Performance |
| Timeline |
| Aeorema Communications |
| Games Workshop Group |
Aeorema Communications and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Games Workshop
The main advantage of trading using opposite Aeorema Communications and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications 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.| Aeorema Communications vs. JD Sports Fashion | Aeorema Communications vs. Litigation Capital Management | Aeorema Communications vs. Liontrust Asset Management | Aeorema Communications vs. Travel Leisure Co |
| Games Workshop vs. Electronic Arts | Games Workshop vs. Zurich Insurance Group | Games Workshop vs. Science in Sport | Games Workshop vs. Liechtensteinische Landesbank AG |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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