Correlation Between Games Workshop and Jiangsu Expressway

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

Diversification Opportunities for Games Workshop and Jiangsu Expressway

-0.05

Correlation Coefficient

Games Workshop  Jiangsu Expressway

Good diversification

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

Pair Corralation between Games Workshop and Jiangsu Expressway

Assuming the 90 days horizon Games Workshop Group is expected to generate 1.43 times more return on investment than Jiangsu Expressway. However, Games Workshop is 1.43 times more volatile than Jiangsu Expressway. It trades about 0.08 of its potential returns per unit of risk. Jiangsu Expressway is currently generating about 0.03 per unit of risk. If you would invest  15,726  in Games Workshop Group on October 27, 2024 and sell it today you would earn a total of  2,274  from holding Games Workshop Group or generate 14.46% return on investment over 90 days.

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

Games Workshop Group  vs.  Jiangsu Expressway

Games Workshop Group

Risk-Adjusted Performance

6 of 100

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Expressway

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jiangsu Expressway is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Games Workshop and Jiangsu Expressway

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

The idea behind Games Workshop Group and Jiangsu Expressway 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.