Correlation Between Aurora Technology and Dave Busters

Can any of the company-specific risk be diversified away by investing in both Aurora Technology 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 Aurora Technology and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aurora Technology Acquisition and Dave Busters Entertainment, you can compare the effects of market volatilities on Aurora Technology 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 Aurora Technology with a short position of Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Technology and Dave Busters.

Diversification Opportunities for Aurora Technology and Dave Busters

0.49

Correlation Coefficient

Aurora Technology  Dave Busters

Very weak diversification

The 3 months correlation between Aurora and Dave is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Technology Acquisition 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 Aurora Technology 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 Aurora Technology Acquisition 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 Aurora Technology i.e., Aurora Technology and Dave Busters go up and down completely randomly.

Pair Corralation between Aurora Technology and Dave Busters

Assuming the 90 days horizon Aurora Technology is expected to generate 2.77 times less return on investment than Dave Busters. But when comparing it to its historical volatility, Aurora Technology Acquisition is 16.23 times less risky than Dave Busters. It trades about 0.12 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,561  in Dave Busters Entertainment on September 3, 2024 and sell it today you would earn a total of  371.00  from holding Dave Busters Entertainment or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	30.71%
Values	Daily Returns

Aurora Technology Acquisition  vs.  Dave Busters Entertainment

Aurora Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Technology Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Aurora Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Dave Busters Enterta

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dave Busters showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Technology and Dave Busters

The main advantage of trading using opposite Aurora Technology and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Technology 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.

The idea behind Aurora Technology Acquisition and Dave Busters Entertainment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.