Correlation Between Highway Holdings and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Cheesecake Factory 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 Highway Holdings and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and The Cheesecake Factory, you can compare the effects of market volatilities on Highway Holdings and Cheesecake Factory 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 Highway Holdings with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Cheesecake Factory.
Diversification Opportunities for Highway Holdings and Cheesecake Factory
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and Cheesecake is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory and Highway Holdings 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 Highway Holdings Limited are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Highway Holdings i.e., Highway Holdings and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Highway Holdings and Cheesecake Factory
Given the investment horizon of 90 days Highway Holdings is expected to generate 38.78 times less return on investment than Cheesecake Factory. In addition to that, Highway Holdings is 1.48 times more volatile than The Cheesecake Factory. It trades about 0.0 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.11 per unit of volatility. If you would invest 3,849 in The Cheesecake Factory on September 1, 2024 and sell it today you would earn a total of 1,215 from holding The Cheesecake Factory or generate 31.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. The Cheesecake Factory
Performance |
| Timeline |
| Highway Holdings |
| The Cheesecake Factory |
Highway Holdings and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Cheesecake Factory
The main advantage of trading using opposite Highway Holdings and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
| Cheesecake Factory vs. The Wendys Co | Cheesecake Factory vs. Shake Shack | Cheesecake Factory vs. Papa Johns International | Cheesecake Factory vs. Darden Restaurants |
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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