Correlation Between Cheesecake Factory and International Media

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

Diversification Opportunities for Cheesecake Factory and International Media

0.0

Correlation Coefficient

Cheesecake Factory  International Media

Pay attention - limited upside

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

Pair Corralation between Cheesecake Factory and International Media

If you would invest (100.00) in International Media Acquisition on December 4, 2024 and sell it today you would earn a total of  100.00  from holding International Media Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Cheesecake Factory  vs.  International Media Acquisitio

The Cheesecake Factory

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Cheesecake Factory has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Cheesecake Factory is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

International Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Media Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, International Media 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 Cheesecake Factory and International Media

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

The idea behind The Cheesecake Factory and International Media Acquisition 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 Transaction History module to view history of all your transactions and understand their impact on performance.