Correlation Between Games Workshop and AJ LUCAS

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

Diversification Opportunities for Games Workshop and AJ LUCAS

0.41

Correlation Coefficient

Games Workshop  AJ LUCAS

Very weak diversification

The 3 months correlation between Games and FW9 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP 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 AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of Games Workshop i.e., Games Workshop and AJ LUCAS go up and down completely randomly.

Pair Corralation between Games Workshop and AJ LUCAS

Assuming the 90 days trading horizon Games Workshop is expected to generate 116.17 times less return on investment than AJ LUCAS. But when comparing it to its historical volatility, Games Workshop Group is 79.44 times less risky than AJ LUCAS. It trades about 0.1 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.05  in AJ LUCAS GROUP on December 28, 2024 and sell it today you would earn a total of  0.00  from holding AJ LUCAS GROUP or generate 0.0% return on investment over 90 days.

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

Games Workshop Group  vs.  AJ LUCAS GROUP

Games Workshop Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Games Workshop may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AJ LUCAS GROUP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AJ LUCAS GROUP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AJ LUCAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and AJ LUCAS

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

The idea behind Games Workshop Group and AJ LUCAS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.