Correlation Between Cheesecake Factory and Azure Holding

Can any of the company-specific risk be diversified away by investing in both Cheesecake Factory and Azure Holding 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 Azure Holding 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 Azure Holding Group, you can compare the effects of market volatilities on Cheesecake Factory and Azure Holding 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 Azure Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Azure Holding.

Diversification Opportunities for Cheesecake Factory and Azure Holding

0.1

Correlation Coefficient

Cheesecake Factory  Azure Holding

Average diversification

The 3 months correlation between Cheesecake and Azure is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Azure Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Holding Group 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 Azure Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Holding Group has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Azure Holding go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Azure Holding

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.19 times more return on investment than Azure Holding. However, The Cheesecake Factory is 5.26 times less risky than Azure Holding. It trades about 0.1 of its potential returns per unit of risk. Azure Holding Group is currently generating about -0.07 per unit of risk. If you would invest  4,634  in The Cheesecake Factory on September 22, 2024 and sell it today you would earn a total of  203.00  from holding The Cheesecake Factory or generate 4.38% return on investment over 90 days.

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

The Cheesecake Factory  vs.  Azure Holding Group

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.

Azure Holding Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Azure Holding Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Azure Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheesecake Factory and Azure Holding

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

The idea behind The Cheesecake Factory and Azure Holding Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.