Correlation Between TH International and Reborn Coffee
Can any of the company-specific risk be diversified away by investing in both TH International and Reborn Coffee 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 TH International and Reborn Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TH International Limited and Reborn Coffee, you can compare the effects of market volatilities on TH International and Reborn Coffee 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 TH International with a short position of Reborn Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of TH International and Reborn Coffee.
Diversification Opportunities for TH International and Reborn Coffee
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between THCH and Reborn is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding TH International Limited and Reborn Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reborn Coffee and TH International 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 TH International Limited are associated (or correlated) with Reborn Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reborn Coffee has no effect on the direction of TH International i.e., TH International and Reborn Coffee go up and down completely randomly.
Pair Corralation between TH International and Reborn Coffee
Given the investment horizon of 90 days TH International Limited is expected to generate 0.9 times more return on investment than Reborn Coffee. However, TH International Limited is 1.11 times less risky than Reborn Coffee. It trades about 0.18 of its potential returns per unit of risk. Reborn Coffee is currently generating about -0.16 per unit of risk. If you would invest 70.00 in TH International Limited on September 4, 2024 and sell it today you would earn a total of 18.00 from holding TH International Limited or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TH International Limited vs. Reborn Coffee
Performance |
| Timeline |
| TH International |
| Reborn Coffee |
TH International and Reborn Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TH International and Reborn Coffee
The main advantage of trading using opposite TH International and Reborn Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TH International position performs unexpectedly, Reborn Coffee 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 Reborn Coffee will offset losses from the drop in Reborn Coffee's long position.| TH International vs. Hyatt Hotels | TH International vs. Smart Share Global | TH International vs. Sweetgreen | TH International vs. Wyndham Hotels Resorts |
| Reborn Coffee vs. Chanson International Holding | Reborn Coffee vs. TH International Limited | Reborn Coffee vs. Flanigans Enterprises | Reborn Coffee vs. Kura Sushi USA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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