Correlation Between Cheesecake Factory and Nano Mobile
Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Nano Mobile 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 Nano Mobile 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 Nano Mobile Healthcare, you can compare the effects of market volatilities on Cheesecake Factory and Nano Mobile 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 Nano Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Nano Mobile.
Diversification Opportunities for Cheesecake Factory and Nano Mobile
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cheesecake and Nano is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Nano Mobile Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Mobile Healthcare 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 Nano Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Mobile Healthcare has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Nano Mobile go up and down completely randomly.
Pair Corralation between Cheesecake Factory and Nano Mobile
Given the investment horizon of 90 days Cheesecake Factory is expected to generate 15.1 times less return on investment than Nano Mobile. But when comparing it to its historical volatility, The Cheesecake Factory is 13.67 times less risky than Nano Mobile. It trades about 0.11 of its potential returns per unit of risk. Nano Mobile Healthcare is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Nano Mobile Healthcare on September 2, 2024 and sell it today you would lose (0.01) from holding Nano Mobile Healthcare or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cheesecake Factory vs. Nano Mobile Healthcare
Performance |
| Timeline |
| The Cheesecake Factory |
| Nano Mobile Healthcare |
Cheesecake Factory and Nano Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheesecake Factory and Nano Mobile
The main advantage of trading using opposite Cheesecake Factory and Nano Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheesecake Factory position performs unexpectedly, Nano Mobile 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 Nano Mobile will offset losses from the drop in Nano Mobile's long position.The idea behind The Cheesecake Factory and Nano Mobile Healthcare 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.| Nano Mobile vs. HE Equipment Services | Nano Mobile vs. Fortress Transp Infra | Nano Mobile vs. 51Talk Online Education | Nano Mobile vs. Universal Technical Institute |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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