Correlation Between BJs Restaurants and CN YANGTPWR
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants and CN YANGTPWR 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 BJs Restaurants and CN YANGTPWR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and CN YANGTPWR GDR, you can compare the effects of market volatilities on BJs Restaurants and CN YANGTPWR 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 BJs Restaurants with a short position of CN YANGTPWR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and CN YANGTPWR.
Diversification Opportunities for BJs Restaurants and CN YANGTPWR
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BJs and CYZB is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and CN YANGTPWR GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN YANGTPWR GDR and BJs Restaurants 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 BJs Restaurants are associated (or correlated) with CN YANGTPWR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN YANGTPWR GDR has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and CN YANGTPWR go up and down completely randomly.
Pair Corralation between BJs Restaurants and CN YANGTPWR
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 0.94 times more return on investment than CN YANGTPWR. However, BJs Restaurants is 1.06 times less risky than CN YANGTPWR. It trades about 0.08 of its potential returns per unit of risk. CN YANGTPWR GDR is currently generating about -0.14 per unit of risk. If you would invest 3,100 in BJs Restaurants on September 13, 2024 and sell it today you would earn a total of 240.00 from holding BJs Restaurants or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. CN YANGTPWR GDR
Performance |
| Timeline |
| BJs Restaurants |
| CN YANGTPWR GDR |
BJs Restaurants and CN YANGTPWR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and CN YANGTPWR
The main advantage of trading using opposite BJs Restaurants and CN YANGTPWR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants position performs unexpectedly, CN YANGTPWR 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 CN YANGTPWR will offset losses from the drop in CN YANGTPWR's long position.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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