Correlation Between Fuyao Glass and Dave Busters

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

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

Diversification Opportunities for Fuyao Glass and Dave Busters

-0.14

Correlation Coefficient

Fuyao Glass  Dave Busters

Good diversification

The 3 months correlation between Fuyao and Dave is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fuyao Glass Industry 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 Fuyao Glass 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 Fuyao Glass Industry 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 Fuyao Glass i.e., Fuyao Glass and Dave Busters go up and down completely randomly.

Pair Corralation between Fuyao Glass and Dave Busters

Assuming the 90 days horizon Fuyao Glass Industry is expected to generate 0.95 times more return on investment than Dave Busters. However, Fuyao Glass Industry is 1.05 times less risky than Dave Busters. It trades about 0.06 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.02 per unit of risk. If you would invest  137.00  in Fuyao Glass Industry on October 8, 2024 and sell it today you would earn a total of  30.00  from holding Fuyao Glass Industry or generate 21.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Fuyao Glass Industry  vs.  Dave Busters Entertainment

Fuyao Glass Industry

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Fuyao Glass showed 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. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fuyao Glass and Dave Busters

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

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.