Correlation Between DISTRICT METALS and Games Workshop

Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS 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 DISTRICT METALS and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DISTRICT METALS and Games Workshop Group, you can compare the effects of market volatilities on DISTRICT METALS 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 DISTRICT METALS with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and Games Workshop.

Diversification Opportunities for DISTRICT METALS and Games Workshop

-0.25

Correlation Coefficient

DISTRICT METALS  Games Workshop

Very good diversification

The 3 months correlation between DISTRICT and Games is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS i.e., DISTRICT METALS and Games Workshop go up and down completely randomly.

Pair Corralation between DISTRICT METALS and Games Workshop

Assuming the 90 days trading horizon DISTRICT METALS is expected to under-perform the Games Workshop. In addition to that, DISTRICT METALS is 3.11 times more volatile than Games Workshop Group. It trades about -0.14 of its total potential returns per unit of risk. Games Workshop Group is currently generating about -0.16 per unit of volatility. If you would invest  17,340  in Games Workshop Group on December 5, 2024 and sell it today you would lose (740.00) from holding Games Workshop Group or give up 4.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DISTRICT METALS  vs.  Games Workshop Group

DISTRICT METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DISTRICT METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DISTRICT METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Games Workshop Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Games Workshop Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Games Workshop is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DISTRICT METALS and Games Workshop

The main advantage of trading using opposite DISTRICT METALS and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS 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 DISTRICT METALS 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.