Correlation Between Dave Busters and Tencent Music

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

By analyzing existing cross correlation between Dave Busters Entertainment and Tencent Music Entertainment, you can compare the effects of market volatilities on Dave Busters and Tencent Music 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 Dave Busters with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Tencent Music.

Diversification Opportunities for Dave Busters and Tencent Music

-0.2

Correlation Coefficient

Dave Busters  Tencent Music

Good diversification

The 3 months correlation between Dave and Tencent is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Dave Busters i.e., Dave Busters and Tencent Music go up and down completely randomly.

Pair Corralation between Dave Busters and Tencent Music

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the Tencent Music. In addition to that, Dave Busters is 1.27 times more volatile than Tencent Music Entertainment. It trades about -0.21 of its total potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.06 per unit of volatility. If you would invest  1,100  in Tencent Music Entertainment on September 23, 2024 and sell it today you would earn a total of  40.00  from holding Tencent Music Entertainment or generate 3.64% return on investment over 90 days.

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

Dave Busters Entertainment  vs.  Tencent Music Entertainment

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tencent Music Entert

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Music Entertainment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tencent Music reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Tencent Music

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

The idea behind Dave Busters Entertainment and Tencent Music Entertainment 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.