Correlation Between BE Semiconductor and Dave Busters

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

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

Diversification Opportunities for BE Semiconductor and Dave Busters

-0.57

Correlation Coefficient

BE Semiconductor  Dave Busters

Excellent diversification

The 3 months correlation between BSI and Dave is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries 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 BE Semiconductor 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 BE Semiconductor Industries 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 BE Semiconductor i.e., BE Semiconductor and Dave Busters go up and down completely randomly.

Pair Corralation between BE Semiconductor and Dave Busters

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 0.5 times more return on investment than Dave Busters. However, BE Semiconductor Industries is 2.01 times less risky than Dave Busters. It trades about 0.34 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.07 per unit of risk. If you would invest  10,125  in BE Semiconductor Industries on October 6, 2024 and sell it today you would earn a total of  3,395  from holding BE Semiconductor Industries or generate 33.53% return on investment over 90 days.

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

BE Semiconductor Industries  vs.  Dave Busters Entertainment

BE Semiconductor Ind

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BE Semiconductor and Dave Busters

The main advantage of trading using opposite BE Semiconductor and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor 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 BE Semiconductor Industries 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.