Correlation Between China Tontine and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both China Tontine 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 China Tontine and Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Tontine Wines and Rave Restaurant Group, you can compare the effects of market volatilities on China Tontine 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 China Tontine with a short position of Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and Rave Restaurant.
Diversification Opportunities for China Tontine and Rave Restaurant
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Rave is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines 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 China Tontine 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 China Tontine Wines 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 China Tontine i.e., China Tontine and Rave Restaurant go up and down completely randomly.
Pair Corralation between China Tontine and Rave Restaurant
Assuming the 90 days horizon China Tontine Wines is expected to generate 30.79 times more return on investment than Rave Restaurant. However, China Tontine is 30.79 times more volatile than Rave Restaurant Group. It trades about 0.1 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.05 per unit of risk. If you would invest 0.20 in China Tontine Wines on August 30, 2024 and sell it today you would earn a total of 6.90 from holding China Tontine Wines or generate 3450.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
China Tontine Wines vs. Rave Restaurant Group
Performance |
| Timeline |
| China Tontine Wines |
| Rave Restaurant Group |
China Tontine and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Tontine and Rave Restaurant
The main advantage of trading using opposite China Tontine and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Tontine 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.| China Tontine vs. Aristocrat Group Corp | China Tontine vs. Naked Wines plc | China Tontine vs. Willamette Valley Vineyards | China Tontine vs. Andrew Peller Limited |
| Rave Restaurant vs. Chipotle Mexican Grill | Rave Restaurant vs. Yum Brands | Rave Restaurant vs. The Wendys Co | Rave Restaurant vs. McDonalds |
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 Stocks Directory module to find actively traded stocks across global markets.
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