Correlation Between Games Workshop and Vale SA

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

Diversification Opportunities for Games Workshop and Vale SA

-0.52

Correlation Coefficient

Games Workshop  Vale SA

Excellent diversification

The 3 months correlation between Games and Vale is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Games Workshop i.e., Games Workshop and Vale SA go up and down completely randomly.

Pair Corralation between Games Workshop and Vale SA

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.91 times more return on investment than Vale SA. However, Games Workshop Group is 1.1 times less risky than Vale SA. It trades about 0.06 of its potential returns per unit of risk. Vale SA is currently generating about 0.03 per unit of risk. If you would invest  9,667  in Games Workshop Group on October 4, 2024 and sell it today you would earn a total of  6,373  from holding Games Workshop Group or generate 65.93% 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.  Vale SA

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 uncertain basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Games Workshop and Vale SA

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

The idea behind Games Workshop Group and Vale SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.