Correlation Between Tsingtao Brewery and Dave Busters

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

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

Diversification Opportunities for Tsingtao Brewery and Dave Busters

-0.35

Correlation Coefficient

Tsingtao Brewery  Dave Busters

Very good diversification

The 3 months correlation between Tsingtao and Dave is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery i.e., Tsingtao Brewery and Dave Busters go up and down completely randomly.

Pair Corralation between Tsingtao Brewery and Dave Busters

Assuming the 90 days trading horizon Tsingtao Brewery is expected to generate 0.41 times more return on investment than Dave Busters. However, Tsingtao Brewery is 2.45 times less risky than Dave Busters. It trades about 0.27 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.26 per unit of risk. If you would invest  597.00  in Tsingtao Brewery on September 28, 2024 and sell it today you would earn a total of  63.00  from holding Tsingtao Brewery or generate 10.55% return on investment over 90 days.

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

Tsingtao Brewery  vs.  Dave Busters Entertainment

Tsingtao Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsingtao Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Tsingtao Brewery is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Tsingtao Brewery and Dave Busters

The main advantage of trading using opposite Tsingtao Brewery and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery 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 Tsingtao Brewery 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.