Correlation Between Games Workshop and Charter Communications

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

Diversification Opportunities for Games Workshop and Charter Communications

0.37

Correlation Coefficient

Games Workshop  Charter Communications

Weak diversification

The 3 months correlation between Games and Charter is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Games Workshop i.e., Games Workshop and Charter Communications go up and down completely randomly.

Pair Corralation between Games Workshop and Charter Communications

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 1.0 times more return on investment than Charter Communications. However, Games Workshop is 1.0 times more volatile than Charter Communications Cl. It trades about -0.09 of its potential returns per unit of risk. Charter Communications Cl is currently generating about -0.42 per unit of risk. If you would invest  1,371,624  in Games Workshop Group on October 15, 2024 and sell it today you would lose (26,624) from holding Games Workshop Group or give up 1.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Games Workshop Group  vs.  Charter Communications Cl

Games Workshop Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Games Workshop exhibited solid returns over the last few months and may actually be approaching a breakup point.

Charter Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Charter Communications is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Games Workshop and Charter Communications

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

The idea behind Games Workshop Group and Charter Communications Cl 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.