Correlation Between Oriental Land and Games Workshop

Can any of the company-specific risk be diversified away by investing in both Oriental Land and Games Workshop 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 Oriental Land and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oriental Land Co and Games Workshop Group, you can compare the effects of market volatilities on Oriental Land and Games Workshop 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 Oriental Land with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Land and Games Workshop.

Diversification Opportunities for Oriental Land and Games Workshop

0.25

Correlation Coefficient

Oriental Land  Games Workshop

Modest diversification

The 3 months correlation between Oriental and Games is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Land Co and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and Oriental Land 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 Oriental Land Co are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Oriental Land i.e., Oriental Land and Games Workshop go up and down completely randomly.

Pair Corralation between Oriental Land and Games Workshop

Assuming the 90 days horizon Oriental Land Co is expected to under-perform the Games Workshop. But the pink sheet apears to be less risky and, when comparing its historical volatility, Oriental Land Co is 1.38 times less risky than Games Workshop. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Games Workshop Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16,800  in Games Workshop Group on December 22, 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	Very Weak
Accuracy	84.13%
Values	Daily Returns

Oriental Land Co  vs.  Games Workshop Group

Oriental Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Oriental Land is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Oriental Land and Games Workshop

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

The idea behind Oriental Land Co and Games Workshop 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.