Correlation Between Games Workshop and TIMES CHINA

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

Diversification Opportunities for Games Workshop and TIMES CHINA

-0.06

Correlation Coefficient

Games Workshop  TIMES CHINA

Good diversification

The 3 months correlation between Games and TIMES is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and TIMES CHINA HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIMES CHINA HLDGS 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 TIMES CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIMES CHINA HLDGS has no effect on the direction of Games Workshop i.e., Games Workshop and TIMES CHINA go up and down completely randomly.

Pair Corralation between Games Workshop and TIMES CHINA

Assuming the 90 days trading horizon Games Workshop is expected to generate 5.3 times less return on investment than TIMES CHINA. But when comparing it to its historical volatility, Games Workshop Group is 6.67 times less risky than TIMES CHINA. It trades about 0.08 of its potential returns per unit of risk. TIMES CHINA HLDGS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.00  in TIMES CHINA HLDGS on October 3, 2024 and sell it today you would lose (0.45) from holding TIMES CHINA HLDGS or give up 11.25% of portfolio value over 90 days.

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

Games Workshop Group  vs.  TIMES CHINA HLDGS

Games Workshop Group

Risk-Adjusted Performance

10 of 100

Good

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.

TIMES CHINA HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIMES CHINA HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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 TIMES CHINA

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

The idea behind Games Workshop Group and TIMES CHINA HLDGS 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.