Correlation Between Games Workshop and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Cairo Communication 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 Cairo Communication 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 Cairo Communication SpA, you can compare the effects of market volatilities on Games Workshop and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Cairo Communication.
Diversification Opportunities for Games Workshop and Cairo Communication
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Games and Cairo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of Games Workshop i.e., Games Workshop and Cairo Communication go up and down completely randomly.
Pair Corralation between Games Workshop and Cairo Communication
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 2.19 times more return on investment than Cairo Communication. However, Games Workshop is 2.19 times more volatile than Cairo Communication SpA. It trades about 0.18 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.07 per unit of risk. If you would invest 1,191,000 in Games Workshop Group on August 30, 2024 and sell it today you would earn a total of 178,000 from holding Games Workshop Group or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Cairo Communication SpA
Performance |
| Timeline |
| Games Workshop Group |
| Cairo Communication SpA |
Games Workshop and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Cairo Communication
The main advantage of trading using opposite Games Workshop and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| Games Workshop vs. Fevertree Drinks Plc | Games Workshop vs. Young Cos Brewery | Games Workshop vs. Pets at Home | Games Workshop vs. Infrastrutture Wireless Italiane |
| Cairo Communication vs. Tungsten West PLC | Cairo Communication vs. Argo Group Limited | Cairo Communication vs. Hardide PLC | Cairo Communication vs. Versarien PLC |
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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