Correlation Between Dave Busters and Demant AS

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

Diversification Opportunities for Dave Busters and Demant AS

0.73

Correlation Coefficient

Dave Busters  Demant AS

Poor diversification

The 3 months correlation between Dave and Demant is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Demant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Demant AS 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 Demant AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Demant AS has no effect on the direction of Dave Busters i.e., Dave Busters and Demant AS go up and down completely randomly.

Pair Corralation between Dave Busters and Demant AS

Given the investment horizon of 90 days Dave Busters Entertainment is expected to generate 1.52 times more return on investment than Demant AS. However, Dave Busters is 1.52 times more volatile than Demant AS. It trades about 0.06 of its potential returns per unit of risk. Demant AS is currently generating about 0.02 per unit of risk. If you would invest  5,203  in Dave Busters Entertainment on January 25, 2024 and sell it today you would earn a total of  410.00  from holding Dave Busters Entertainment or generate 7.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Dave Busters Entertainment  vs.  Demant AS

Dave Busters Enterta

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dave Busters may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Demant AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Demant AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Demant AS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dave Busters and Demant AS

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

The idea behind Dave Busters Entertainment and Demant AS 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.