Correlation Between Dave Busters and CapitaLand Investment

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

Diversification Opportunities for Dave Busters and CapitaLand Investment

-0.43

Correlation Coefficient

Dave Busters  CapitaLand Investment

Very good diversification

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

Pair Corralation between Dave Busters and CapitaLand Investment

Given the investment horizon of 90 days Dave Busters Entertainment is expected to generate 1.47 times more return on investment than CapitaLand Investment. However, Dave Busters is 1.47 times more volatile than CapitaLand Investment Limited. It trades about 0.12 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.07 per unit of risk. 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

Dave Busters Entertainment  vs.  CapitaLand Investment Limited

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.

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.

Pair Trading with Dave Busters and CapitaLand Investment

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

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