Correlation Between Games Workshop and Evolution Gaming

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

Diversification Opportunities for Games Workshop and Evolution Gaming

0.13

Correlation Coefficient

Games Workshop  Evolution Gaming

Average diversification

The 3 months correlation between Games and Evolution is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Games Workshop i.e., Games Workshop and Evolution Gaming go up and down completely randomly.

Pair Corralation between Games Workshop and Evolution Gaming

Assuming the 90 days horizon Games Workshop Group is expected to generate 1.21 times more return on investment than Evolution Gaming. However, Games Workshop is 1.21 times more volatile than Evolution Gaming Group. It trades about 0.08 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about 0.06 per unit of risk. If you would invest  16,800  in Games Workshop Group on December 21, 2024 and sell it today you would earn a total of  1,500  from holding Games Workshop Group or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Games Workshop Group  vs.  Evolution Gaming Group

Games Workshop Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward-looking signals, Games Workshop may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Evolution Gaming

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Games Workshop and Evolution Gaming

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

The idea behind Games Workshop Group and Evolution Gaming Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..