Correlation Between Cheesecake Factory and Thai Oil

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

Diversification Opportunities for Cheesecake Factory and Thai Oil

0.0

Correlation Coefficient

Cheesecake Factory  Thai Oil

Pay attention - limited upside

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

Pair Corralation between Cheesecake Factory and Thai Oil

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 1.17 times more return on investment than Thai Oil. However, Cheesecake Factory is 1.17 times more volatile than Thai Oil Public. It trades about 0.04 of its potential returns per unit of risk. Thai Oil Public is currently generating about 0.01 per unit of risk. If you would invest  3,585  in The Cheesecake Factory on October 3, 2024 and sell it today you would earn a total of  1,152  from holding The Cheesecake Factory or generate 32.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	44.24%
Values	Daily Returns

The Cheesecake Factory  vs.  Thai Oil Public

The Cheesecake Factory

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 9 (%) 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.

Thai Oil Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Oil Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thai Oil is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cheesecake Factory and Thai Oil

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

The idea behind The Cheesecake Factory and Thai Oil Public 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .