Correlation Between Dave Busters and Sunny Optical

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

Diversification Opportunities for Dave Busters and Sunny Optical

-0.3

Correlation Coefficient

Dave Busters  Sunny Optical

Very good diversification

The 3 months correlation between Dave and Sunny is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Dave Busters i.e., Dave Busters and Sunny Optical go up and down completely randomly.

Pair Corralation between Dave Busters and Sunny Optical

Assuming the 90 days horizon Dave Busters is expected to generate 36.99 times less return on investment than Sunny Optical. In addition to that, Dave Busters is 1.18 times more volatile than Sunny Optical Technology. It trades about 0.0 of its total potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.13 per unit of volatility. If you would invest  654.00  in Sunny Optical Technology on September 30, 2024 and sell it today you would earn a total of  204.00  from holding Sunny Optical Technology or generate 31.19% return on investment over 90 days.

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

Dave Busters Entertainment  vs.  Sunny Optical Technology

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.

Sunny Optical Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Sunny Optical

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

The idea behind Dave Busters Entertainment and Sunny Optical Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.