Correlation Between Games Workshop and Sekisui House

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

Diversification Opportunities for Games Workshop and Sekisui House

-0.56

Correlation Coefficient

Games Workshop  Sekisui House

Excellent diversification

The 3 months correlation between Games and Sekisui is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House 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 Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Games Workshop i.e., Games Workshop and Sekisui House go up and down completely randomly.

Pair Corralation between Games Workshop and Sekisui House

Assuming the 90 days trading horizon Games Workshop is expected to generate 5.24 times less return on investment than Sekisui House. In addition to that, Games Workshop is 1.88 times more volatile than Sekisui House. It trades about 0.0 of its total potential returns per unit of risk. Sekisui House is currently generating about 0.05 per unit of volatility. If you would invest  2,200  in Sekisui House on September 27, 2024 and sell it today you would earn a total of  20.00  from holding Sekisui House or generate 0.91% 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.  Sekisui House

Games Workshop Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 9 (%) 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.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Games Workshop and Sekisui House

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

The idea behind Games Workshop Group and Sekisui House 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.