Correlation Between Games Workshop and ALD SA
Can any of the company-specific risk be diversified away by investing in both Games Workshop and ALD SA 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 ALD SA 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 ALD SA, you can compare the effects of market volatilities on Games Workshop and ALD SA 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 ALD SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and ALD SA.
Diversification Opportunities for Games Workshop and ALD SA
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Games and ALD is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and ALD SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALD SA 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 ALD SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALD SA has no effect on the direction of Games Workshop i.e., Games Workshop and ALD SA go up and down completely randomly.
Pair Corralation between Games Workshop and ALD SA
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 1.35 times more return on investment than ALD SA. However, Games Workshop is 1.35 times more volatile than ALD SA. It trades about 0.2 of its potential returns per unit of risk. ALD SA is currently generating about 0.03 per unit of risk. If you would invest 14,300 in Games Workshop Group on September 2, 2024 and sell it today you would earn a total of 2,600 from holding Games Workshop Group or generate 18.18% 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. ALD SA
Performance |
| Timeline |
| Games Workshop Group |
| ALD SA |
Games Workshop and ALD SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and ALD SA
The main advantage of trading using opposite Games Workshop and ALD SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, ALD SA 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 ALD SA will offset losses from the drop in ALD SA's long position.| Games Workshop vs. Scandinavian Tobacco Group | Games Workshop vs. Columbia Sportswear | Games Workshop vs. Siamgas And Petrochemicals | Games Workshop vs. SHIN ETSU CHEMICAL |
| ALD SA vs. G8 EDUCATION | ALD SA vs. United Utilities Group | ALD SA vs. TAL Education Group | ALD SA vs. Japan Tobacco |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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