Correlation Between ALEFARM BREWING and TEXAS ROADHOUSE

Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and TEXAS ROADHOUSE 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 ALEFARM BREWING and TEXAS ROADHOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALEFARM BREWING DK 05 and TEXAS ROADHOUSE, you can compare the effects of market volatilities on ALEFARM BREWING and TEXAS ROADHOUSE 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 ALEFARM BREWING with a short position of TEXAS ROADHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and TEXAS ROADHOUSE.

Diversification Opportunities for ALEFARM BREWING and TEXAS ROADHOUSE

-0.38

Correlation Coefficient

ALEFARM BREWING  TEXAS ROADHOUSE

Very good diversification

The 3 months correlation between ALEFARM and TEXAS is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with TEXAS ROADHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEXAS ROADHOUSE has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and TEXAS ROADHOUSE go up and down completely randomly.

Pair Corralation between ALEFARM BREWING and TEXAS ROADHOUSE

Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to under-perform the TEXAS ROADHOUSE. In addition to that, ALEFARM BREWING is 2.97 times more volatile than TEXAS ROADHOUSE. It trades about 0.0 of its total potential returns per unit of risk. TEXAS ROADHOUSE is currently generating about 0.09 per unit of volatility. If you would invest  8,837  in TEXAS ROADHOUSE on October 4, 2024 and sell it today you would earn a total of  8,468  from holding TEXAS ROADHOUSE or generate 95.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ALEFARM BREWING DK 05  vs.  TEXAS ROADHOUSE

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TEXAS ROADHOUSE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TEXAS ROADHOUSE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALEFARM BREWING and TEXAS ROADHOUSE

The main advantage of trading using opposite ALEFARM BREWING and TEXAS ROADHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING position performs unexpectedly, TEXAS ROADHOUSE 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 TEXAS ROADHOUSE will offset losses from the drop in TEXAS ROADHOUSE's long position.

The idea behind ALEFARM BREWING DK 05 and TEXAS ROADHOUSE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.