Correlation Between Astar and Red Robin

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

By analyzing existing cross correlation between Astar and Red Robin Gourmet, you can compare the effects of market volatilities on Astar and Red Robin 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 Astar with a short position of Red Robin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Red Robin.

Diversification Opportunities for Astar and Red Robin

-0.46

Correlation Coefficient

Astar  Red Robin

Very good diversification

The 3 months correlation between Astar and Red is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Red Robin Gourmet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Robin Gourmet and Astar 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 Astar are associated (or correlated) with Red Robin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Robin Gourmet has no effect on the direction of Astar i.e., Astar and Red Robin go up and down completely randomly.

Pair Corralation between Astar and Red Robin

Assuming the 90 days trading horizon Astar is expected to under-perform the Red Robin. In addition to that, Astar is 1.53 times more volatile than Red Robin Gourmet. It trades about -0.13 of its total potential returns per unit of risk. Red Robin Gourmet is currently generating about 0.08 per unit of volatility. If you would invest  551.00  in Red Robin Gourmet on October 24, 2024 and sell it today you would earn a total of  21.00  from holding Red Robin Gourmet or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Astar  vs.  Red Robin Gourmet

Astar

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Red Robin Gourmet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Robin Gourmet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Red Robin is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and Red Robin

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

The idea behind Astar and Red Robin Gourmet 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.