Correlation Between Games Workshop and Trellus Health

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

Diversification Opportunities for Games Workshop and Trellus Health

-0.71

Correlation Coefficient

Games Workshop  Trellus Health

Pay attention - limited upside

The 3 months correlation between Games and Trellus is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health plc 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Games Workshop i.e., Games Workshop and Trellus Health go up and down completely randomly.

Pair Corralation between Games Workshop and Trellus Health

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.39 times more return on investment than Trellus Health. However, Games Workshop Group is 2.54 times less risky than Trellus Health. It trades about -0.21 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.15 per unit of risk. If you would invest  1,387,000  in Games Workshop Group on September 29, 2024 and sell it today you would lose (70,000) from holding Games Workshop Group or give up 5.05% of portfolio value over 90 days.

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

Games Workshop Group  vs.  Trellus Health plc

Games Workshop Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 11 (%) 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.

Trellus Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellus Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Games Workshop and Trellus Health

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

The idea behind Games Workshop Group and Trellus Health plc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.