Correlation Between China Railway and Dave Busters
Can any of the company-specific risk be diversified away by investing in both China Railway 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 China Railway and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Signal and Dave Busters Entertainment, you can compare the effects of market volatilities on China Railway 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 China Railway with a short position of Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Dave Busters.
Diversification Opportunities for China Railway and Dave Busters
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Dave is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Signal 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 China Railway 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 China Railway Signal 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 China Railway i.e., China Railway and Dave Busters go up and down completely randomly.
Pair Corralation between China Railway and Dave Busters
Assuming the 90 days horizon China Railway Signal is expected to generate 2.55 times more return on investment than Dave Busters. However, China Railway is 2.55 times more volatile than Dave Busters Entertainment. It trades about 0.08 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.1 per unit of risk. If you would invest 15.00 in China Railway Signal on December 2, 2024 and sell it today you would earn a total of 25.00 from holding China Railway Signal or generate 166.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Signal vs. Dave Busters Entertainment
Performance |
| Timeline |
| China Railway Signal |
| Dave Busters Enterta |
China Railway and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Dave Busters
The main advantage of trading using opposite China Railway and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway 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.| China Railway vs. DISTRICT METALS | China Railway vs. GRIFFIN MINING LTD | China Railway vs. PICKN PAY STORES | China Railway vs. Stag Industrial |
| Dave Busters vs. Neinor Homes SA | Dave Busters vs. CENTURIA OFFICE REIT | Dave Busters vs. Dairy Farm International | Dave Busters vs. Daito Trust Construction |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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