Correlation Between Cheesecake Factory and China State
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and China State 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 Cheesecake Factory and China State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Cheesecake Factory and China State Construction, you can compare the effects of market volatilities on Cheesecake Factory and China State 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 Cheesecake Factory with a short position of China State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and China State.
Diversification Opportunities for Cheesecake Factory and China State
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cheesecake and China is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and China State Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China State Construction and Cheesecake Factory 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 The Cheesecake Factory are associated (or correlated) with China State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China State Construction has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and China State go up and down completely randomly.
Pair Corralation between Cheesecake Factory and China State
Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.32 times more return on investment than China State. However, The Cheesecake Factory is 3.14 times less risky than China State. It trades about 0.09 of its potential returns per unit of risk. China State Construction is currently generating about -0.22 per unit of risk. If you would invest 4,832 in The Cheesecake Factory on September 14, 2024 and sell it today you would earn a total of 164.00 from holding The Cheesecake Factory or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. China State Construction
Performance |
| Timeline |
| The Cheesecake Factory |
| China State Construction |
Cheesecake Factory and China State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and China State
The main advantage of trading using opposite Cheesecake Factory and China State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, China State 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 China State will offset losses from the drop in China State's long position.| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker International |
| China State vs. Sun Country Airlines | China State vs. Proficient Auto Logistics, | China State vs. Shake Shack | China State vs. The Cheesecake Factory |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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