Correlation Between Games Workshop and BYD ELECTRONIC

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

Diversification Opportunities for Games Workshop and BYD ELECTRONIC

-0.15

Correlation Coefficient

Games Workshop  BYD ELECTRONIC

Good diversification

The 3 months correlation between Games and BYD is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and BYD ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD ELECTRONIC 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 BYD ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD ELECTRONIC has no effect on the direction of Games Workshop i.e., Games Workshop and BYD ELECTRONIC go up and down completely randomly.

Pair Corralation between Games Workshop and BYD ELECTRONIC

Assuming the 90 days trading horizon Games Workshop is expected to generate 1.85 times less return on investment than BYD ELECTRONIC. But when comparing it to its historical volatility, Games Workshop Group is 1.63 times less risky than BYD ELECTRONIC. It trades about 0.04 of its potential returns per unit of risk. BYD ELECTRONIC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  179.00  in BYD ELECTRONIC on February 7, 2024 and sell it today you would earn a total of  147.00  from holding BYD ELECTRONIC or generate 82.12% 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.  BYD ELECTRONIC

Games Workshop Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Games Workshop Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Games Workshop is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BYD ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BYD ELECTRONIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BYD ELECTRONIC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Games Workshop and BYD ELECTRONIC

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

The idea behind Games Workshop Group and BYD ELECTRONIC 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.