Correlation Between CapitaLand Investment and Dave Busters

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

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

Diversification Opportunities for CapitaLand Investment and Dave Busters

-0.43

Correlation Coefficient

CapitaLand Investment  Dave Busters

Very good diversification

The 3 months correlation between CapitaLand and Dave is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta and CapitaLand Investment 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 CapitaLand Investment Limited are associated (or correlated) with Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and Dave Busters go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Dave Busters

Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Dave Busters. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 1.47 times less risky than Dave Busters. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Dave Busters Entertainment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,027  in Dave Busters Entertainment on September 5, 2024 and sell it today you would earn a total of  789.00  from holding Dave Busters Entertainment or generate 26.07% return on investment over 90 days.

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

CapitaLand Investment Limited  vs.  Dave Busters Entertainment

CapitaLand Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dave Busters Enterta

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Dave Busters showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CapitaLand Investment and Dave Busters

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

The idea behind CapitaLand Investment Limited and Dave Busters 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.