Correlation Between TEXAS ROADHOUSE and KHD Humboldt
Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and KHD Humboldt 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 TEXAS ROADHOUSE and KHD Humboldt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TEXAS ROADHOUSE and KHD Humboldt Wedag, you can compare the effects of market volatilities on TEXAS ROADHOUSE and KHD Humboldt 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 TEXAS ROADHOUSE with a short position of KHD Humboldt. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and KHD Humboldt.
Diversification Opportunities for TEXAS ROADHOUSE and KHD Humboldt
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TEXAS and KHD is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and KHD Humboldt Wedag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHD Humboldt Wedag and TEXAS ROADHOUSE 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 TEXAS ROADHOUSE are associated (or correlated) with KHD Humboldt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHD Humboldt Wedag has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and KHD Humboldt go up and down completely randomly.
Pair Corralation between TEXAS ROADHOUSE and KHD Humboldt
Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.49 times more return on investment than KHD Humboldt. However, TEXAS ROADHOUSE is 2.02 times less risky than KHD Humboldt. It trades about 0.14 of its potential returns per unit of risk. KHD Humboldt Wedag is currently generating about 0.05 per unit of risk. If you would invest 17,385 in TEXAS ROADHOUSE on August 27, 2024 and sell it today you would earn a total of 905.00 from holding TEXAS ROADHOUSE or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TEXAS ROADHOUSE vs. KHD Humboldt Wedag
Performance |
| Timeline |
| TEXAS ROADHOUSE |
| KHD Humboldt Wedag |
TEXAS ROADHOUSE and KHD Humboldt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TEXAS ROADHOUSE and KHD Humboldt
The main advantage of trading using opposite TEXAS ROADHOUSE and KHD Humboldt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TEXAS ROADHOUSE position performs unexpectedly, KHD Humboldt 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 KHD Humboldt will offset losses from the drop in KHD Humboldt's long position.| TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Apple Inc | TEXAS ROADHOUSE vs. Microsoft |
| KHD Humboldt vs. Western Copper and | KHD Humboldt vs. AEGEAN AIRLINES | KHD Humboldt vs. WESTLAKE CHEMICAL | KHD Humboldt vs. Gol Intelligent Airlines |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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