Correlation Between Games Workshop and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Highlight Communications 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 Highlight Communications 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 Highlight Communications AG, you can compare the effects of market volatilities on Games Workshop and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Highlight Communications.
Diversification Opportunities for Games Workshop and Highlight Communications
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Games and Highlight is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Games Workshop i.e., Games Workshop and Highlight Communications go up and down completely randomly.
Pair Corralation between Games Workshop and Highlight Communications
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.7 times more return on investment than Highlight Communications. However, Games Workshop Group is 1.42 times less risky than Highlight Communications. It trades about 0.13 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.12 per unit of risk. If you would invest 11,493 in Games Workshop Group on August 31, 2024 and sell it today you would earn a total of 5,407 from holding Games Workshop Group or generate 47.05% 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. Highlight Communications AG
Performance |
| Timeline |
| Games Workshop Group |
| Highlight Communications |
Games Workshop and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Highlight Communications
The main advantage of trading using opposite Games Workshop and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
| Highlight Communications vs. Netflix | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp | Highlight Communications vs. NMI Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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