Correlation Between Cheesecake Factory and Greenland Technologies

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

Diversification Opportunities for Cheesecake Factory and Greenland Technologies

0.52

Correlation Coefficient

Cheesecake Factory  Greenland Technologies

Very weak diversification

The 3 months correlation between Cheesecake and Greenland is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Greenland Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenland Technologies 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 Greenland Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenland Technologies has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Greenland Technologies go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Greenland Technologies

If you would invest  3,716  in The Cheesecake Factory on September 13, 2024 and sell it today you would earn a total of  1,291  from holding The Cheesecake Factory or generate 34.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

The Cheesecake Factory  vs.  Greenland Technologies Holding

The Cheesecake Factory

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, Cheesecake Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Greenland Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenland Technologies Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Greenland Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cheesecake Factory and Greenland Technologies

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

The idea behind The Cheesecake Factory and Greenland Technologies Holding 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.