Correlation Between Airports and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Airports and Rave Restaurant 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 Airports and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and Rave Restaurant Group, you can compare the effects of market volatilities on Airports and Rave Restaurant 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 Airports with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Rave Restaurant.
Diversification Opportunities for Airports and Rave Restaurant
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Airports and Rave is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group and Airports 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 Airports of Thailand are associated (or correlated) with Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Airports i.e., Airports and Rave Restaurant go up and down completely randomly.
Pair Corralation between Airports and Rave Restaurant
Assuming the 90 days horizon Airports is expected to generate 4.65 times less return on investment than Rave Restaurant. But when comparing it to its historical volatility, Airports of Thailand is 1.34 times less risky than Rave Restaurant. It trades about 0.02 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Rave Restaurant Group on August 29, 2024 and sell it today you would earn a total of 142.00 from holding Rave Restaurant Group or generate 94.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 76.59% |
| Values | Daily Returns |
Airports of Thailand vs. Rave Restaurant Group
Performance |
| Timeline |
| Airports of Thailand |
| Rave Restaurant Group |
Airports and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Rave Restaurant
The main advantage of trading using opposite Airports and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.| Airports vs. Aerofoam Metals | Airports vs. Porvair plc | Airports vs. Tyson Foods | Airports vs. Lion One Metals |
| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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