Correlation Between Dave Busters and SAS AB

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

Diversification Opportunities for Dave Busters and SAS AB

0.34

Correlation Coefficient

Dave Busters  SAS AB

Weak diversification

The 3 months correlation between Dave and SAS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and SAS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAS AB 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 SAS AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAS AB has no effect on the direction of Dave Busters i.e., Dave Busters and SAS AB go up and down completely randomly.

Pair Corralation between Dave Busters and SAS AB

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the SAS AB. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 8.41 times less risky than SAS AB. The stock trades about -0.09 of its potential returns per unit of risk. The SAS AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.21  in SAS AB on January 25, 2024 and sell it today you would earn a total of  0.36  from holding SAS AB or generate 29.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.86%
Values	Daily Returns

Dave Busters Entertainment  vs.  SAS AB

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.

SAS AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAS AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, SAS AB disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and SAS AB

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

The idea behind Dave Busters Entertainment and SAS AB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.