Correlation Between Cheesecake Factory and Kura Sushi

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

Diversification Opportunities for Cheesecake Factory and Kura Sushi

0.79

Correlation Coefficient

Cheesecake Factory  Kura Sushi

Poor diversification

The 3 months correlation between Cheesecake and Kura is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Kura Sushi go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Kura Sushi

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 0.91 times more return on investment than Kura Sushi. However, The Cheesecake Factory is 1.1 times less risky than Kura Sushi. It trades about -0.01 of its potential returns per unit of risk. Kura Sushi USA is currently generating about -0.25 per unit of risk. If you would invest  4,877  in The Cheesecake Factory on September 25, 2024 and sell it today you would lose (40.00) from holding The Cheesecake Factory or give up 0.82% of portfolio value over 90 days.

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

The Cheesecake Factory  vs.  Kura Sushi USA

The Cheesecake Factory

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 10 (%) 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.

Kura Sushi USA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kura Sushi USA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kura Sushi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheesecake Factory and Kura Sushi

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

The idea behind The Cheesecake Factory and Kura Sushi USA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.