Correlation Between BJs Restaurants and Oasis Hotel

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

By analyzing existing cross correlation between BJs Restaurants and Oasis Hotel Resort, you can compare the effects of market volatilities on BJs Restaurants and Oasis Hotel 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 Oasis Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Oasis Hotel.

Diversification Opportunities for BJs Restaurants and Oasis Hotel

0.0

Correlation Coefficient

BJs Restaurants  Oasis Hotel

Pay attention - limited upside

The 3 months correlation between BJs and Oasis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Oasis Hotel Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Hotel Resort 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 Oasis Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasis Hotel Resort has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Oasis Hotel go up and down completely randomly.

Pair Corralation between BJs Restaurants and Oasis Hotel

Given the investment horizon of 90 days BJs Restaurants is expected to generate 0.64 times more return on investment than Oasis Hotel. However, BJs Restaurants is 1.55 times less risky than Oasis Hotel. It trades about 0.02 of its potential returns per unit of risk. Oasis Hotel Resort is currently generating about -0.05 per unit of risk. If you would invest  3,127  in BJs Restaurants on October 3, 2024 and sell it today you would earn a total of  387.00  from holding BJs Restaurants or generate 12.38% return on investment over 90 days.

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

BJs Restaurants  vs.  Oasis Hotel Resort

BJs Restaurants

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Oasis Hotel Resort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oasis Hotel Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Oasis Hotel is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BJs Restaurants and Oasis Hotel

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

The idea behind BJs Restaurants and Oasis Hotel Resort 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.