Correlation Between Games Workshop and PLAYMATES TOYS

Can any of the company-specific risk be diversified away by investing in both Games Workshop and PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS, you can compare the effects of market volatilities on Games Workshop and PLAYMATES TOYS 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 PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and PLAYMATES TOYS.

Diversification Opportunities for Games Workshop and PLAYMATES TOYS

-0.24

Correlation Coefficient

Games Workshop  PLAYMATES TOYS

Very good diversification

The 3 months correlation between Games and PLAYMATES is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS 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 PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of Games Workshop i.e., Games Workshop and PLAYMATES TOYS go up and down completely randomly.

Pair Corralation between Games Workshop and PLAYMATES TOYS

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.75 times more return on investment than PLAYMATES TOYS. However, Games Workshop Group is 1.33 times less risky than PLAYMATES TOYS. It trades about 0.13 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about 0.05 per unit of risk. If you would invest  12,715  in Games Workshop Group on September 30, 2024 and sell it today you would earn a total of  2,995  from holding Games Workshop Group or generate 23.55% return on investment over 90 days.

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

Games Workshop Group  vs.  PLAYMATES TOYS

Games Workshop Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

PLAYMATES TOYS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYMATES TOYS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PLAYMATES TOYS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and PLAYMATES TOYS

The main advantage of trading using opposite Games Workshop and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.

The idea behind Games Workshop Group and PLAYMATES TOYS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.