Correlation Between Games Workshop and BW Offshore

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

Diversification Opportunities for Games Workshop and BW Offshore

0.05

Correlation Coefficient

Games Workshop  BW Offshore

Significant diversification

The 3 months correlation between Games and 0RKH is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Games Workshop i.e., Games Workshop and BW Offshore go up and down completely randomly.

Pair Corralation between Games Workshop and BW Offshore

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.9 times more return on investment than BW Offshore. However, Games Workshop Group is 1.11 times less risky than BW Offshore. It trades about 0.05 of its potential returns per unit of risk. BW Offshore is currently generating about 0.04 per unit of risk. If you would invest  1,064,432  in Games Workshop Group on September 12, 2024 and sell it today you would earn a total of  325,568  from holding Games Workshop Group or generate 30.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.03%
Values	Daily Returns

Games Workshop Group  vs.  BW Offshore

Games Workshop Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 15 (%) 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.

BW Offshore

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BW Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Games Workshop and BW Offshore

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

The idea behind Games Workshop Group and BW Offshore 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.