Correlation Between Cheesecake Factory and Asure Software

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

By analyzing existing cross correlation between The Cheesecake Factory and Asure Software, you can compare the effects of market volatilities on Cheesecake Factory and Asure Software 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 Cheesecake Factory with a short position of Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Asure Software.

Diversification Opportunities for Cheesecake Factory and Asure Software

0.28

Correlation Coefficient

Cheesecake Factory  Asure Software

Modest diversification

The 3 months correlation between Cheesecake and Asure is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Cheesecake Factory 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 The Cheesecake Factory are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Asure Software go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Asure Software

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.64 times more return on investment than Asure Software. However, The Cheesecake Factory is 1.57 times less risky than Asure Software. It trades about 0.04 of its potential returns per unit of risk. Asure Software is currently generating about 0.03 per unit of risk. If you would invest  3,716  in The Cheesecake Factory on October 25, 2024 and sell it today you would earn a total of  1,389  from holding The Cheesecake Factory or generate 37.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Cheesecake Factory  vs.  Asure Software

The Cheesecake Factory

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Cheesecake Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Asure Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asure Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheesecake Factory and Asure Software

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

The idea behind The Cheesecake Factory and Asure Software 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.