Correlation Between Games Workshop and Yamaha

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

Diversification Opportunities for Games Workshop and Yamaha

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Games and Yamaha is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha 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 Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of Games Workshop i.e., Games Workshop and Yamaha go up and down completely randomly.

Pair Corralation between Games Workshop and Yamaha

Assuming the 90 days horizon Games Workshop is expected to generate 1.44 times less return on investment than Yamaha. In addition to that, Games Workshop is 1.7 times more volatile than Yamaha. It trades about 0.1 of its total potential returns per unit of risk. Yamaha is currently generating about 0.23 per unit of volatility. If you would invest  2,035  in Yamaha on December 30, 2023 and sell it today you would earn a total of  83.00  from holding Yamaha or generate 4.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Games Workshop Group  vs.  Yamaha

 Performance 
       Timeline  
Games Workshop Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Games Workshop Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Games Workshop is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Yamaha 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Yamaha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Yamaha is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Games Workshop and Yamaha Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Games Workshop and Yamaha

The main advantage of trading using opposite Games Workshop and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha's long position.
The idea behind Games Workshop Group and Yamaha 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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