Correlation Between Dave Busters and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Dave Busters and Hon Hai 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 Hon Hai 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 Hon Hai Precision, you can compare the effects of market volatilities on Dave Busters and Hon Hai 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 Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Hon Hai.
Diversification Opportunities for Dave Busters and Hon Hai
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dave and Hon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision 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 Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Dave Busters i.e., Dave Busters and Hon Hai go up and down completely randomly.
Pair Corralation between Dave Busters and Hon Hai
Assuming the 90 days horizon Dave Busters Entertainment is expected to generate 1.14 times more return on investment than Hon Hai. However, Dave Busters is 1.14 times more volatile than Hon Hai Precision. It trades about -0.1 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.2 per unit of risk. If you would invest 3,620 in Dave Busters Entertainment on September 12, 2024 and sell it today you would lose (260.00) from holding Dave Busters Entertainment or give up 7.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dave Busters Entertainment vs. Hon Hai Precision
Performance |
| Timeline |
| Dave Busters Enterta |
| Hon Hai Precision |
Dave Busters and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and Hon Hai
The main advantage of trading using opposite Dave Busters and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Dave Busters vs. REVO INSURANCE SPA | Dave Busters vs. JSC Halyk bank | Dave Busters vs. The Hanover Insurance | Dave Busters vs. Jupiter Fund Management |
| Hon Hai vs. BJs Wholesale Club | Hon Hai vs. BURLINGTON STORES | Hon Hai vs. CEOTRONICS | Hon Hai vs. Corporate Travel Management |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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