Correlation Between Dave Busters and Lenovo Group

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

Diversification Opportunities for Dave Busters and Lenovo Group

-0.17

Correlation Coefficient

Dave Busters  Lenovo Group

Good diversification

The 3 months correlation between Dave and Lenovo is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited 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 Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group Limited has no effect on the direction of Dave Busters i.e., Dave Busters and Lenovo Group go up and down completely randomly.

Pair Corralation between Dave Busters and Lenovo Group

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the Lenovo Group. In addition to that, Dave Busters is 1.39 times more volatile than Lenovo Group Limited. It trades about -0.29 of its total potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.1 per unit of volatility. If you would invest  2,280  in Lenovo Group Limited on October 4, 2024 and sell it today you would earn a total of  140.00  from holding Lenovo Group Limited or generate 6.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Dave Busters Entertainment  vs.  Lenovo Group Limited

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lenovo Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lenovo Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lenovo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dave Busters and Lenovo Group

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

The idea behind Dave Busters Entertainment and Lenovo Group 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..