Correlation Between Bagger Daves and TH International

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Can any of the company-specific risk be diversified away by investing in both Bagger Daves and TH International 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 Bagger Daves and TH International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bagger Daves Burger and TH International Limited, you can compare the effects of market volatilities on Bagger Daves and TH International 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 Bagger Daves with a short position of TH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and TH International.

Diversification Opportunities for Bagger Daves and TH International

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bagger and THCH is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and TH International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TH International and Bagger Daves 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 Bagger Daves Burger are associated (or correlated) with TH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TH International has no effect on the direction of Bagger Daves i.e., Bagger Daves and TH International go up and down completely randomly.

Pair Corralation between Bagger Daves and TH International

Given the investment horizon of 90 days Bagger Daves Burger is expected to under-perform the TH International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bagger Daves Burger is 1.68 times less risky than TH International. The pink sheet trades about -0.02 of its potential returns per unit of risk. The TH International Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  69.00  in TH International Limited on September 2, 2024 and sell it today you would earn a total of  21.00  from holding TH International Limited or generate 30.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Bagger Daves Burger  vs.  TH International Limited

 Performance 
       Timeline  
Bagger Daves Burger 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bagger Daves Burger are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Bagger Daves sustained solid returns over the last few months and may actually be approaching a breakup point.
TH International 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in TH International Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, TH International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bagger Daves and TH International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bagger Daves and TH International

The main advantage of trading using opposite Bagger Daves and TH International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bagger Daves position performs unexpectedly, TH International 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 TH International will offset losses from the drop in TH International's long position.
The idea behind Bagger Daves Burger and TH International Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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