Correlation Between Sea and Games Workshop

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

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

Diversification Opportunities for Sea and Games Workshop

0.43

Correlation Coefficient

Sea  Games Workshop

Very weak diversification

The 3 months correlation between Sea and Games is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sea 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 Sea 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 Sea 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 Sea i.e., Sea and Games Workshop go up and down completely randomly.

Pair Corralation between Sea and Games Workshop

Allowing for the 90-day total investment horizon Sea is expected to generate 1.09 times more return on investment than Games Workshop. However, Sea is 1.09 times more volatile than Games Workshop Group. It trades about 0.08 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.03 per unit of risk. If you would invest  11,164  in Sea on December 19, 2024 and sell it today you would earn a total of  1,349  from holding Sea or generate 12.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.44%
Values	Daily Returns

Sea  vs.  Games Workshop Group

Sea

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Games Workshop Group

Risk-Adjusted Performance

Weak

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

Pair Trading with Sea and Games Workshop

The main advantage of trading using opposite Sea and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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 Sea 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.