Correlation Between Celsius Holdings and Cheesecake Factory

Can any of the company-specific risk be diversified away by investing in both Celsius Holdings and Cheesecake Factory 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 Celsius Holdings and Cheesecake Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Celsius Holdings and The Cheesecake Factory, you can compare the effects of market volatilities on Celsius Holdings and Cheesecake Factory 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 Celsius Holdings with a short position of Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celsius Holdings and Cheesecake Factory.

Diversification Opportunities for Celsius Holdings and Cheesecake Factory

-0.58

Correlation Coefficient

Celsius Holdings  Cheesecake Factory

Excellent diversification

The 3 months correlation between Celsius and Cheesecake is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory and Celsius Holdings 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 Celsius Holdings are associated (or correlated) with Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Cheesecake Factory go up and down completely randomly.

Pair Corralation between Celsius Holdings and Cheesecake Factory

Given the investment horizon of 90 days Celsius Holdings is expected to generate 4.47 times less return on investment than Cheesecake Factory. In addition to that, Celsius Holdings is 1.77 times more volatile than The Cheesecake Factory. It trades about 0.02 of its total potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.16 per unit of volatility. If you would invest  3,973  in The Cheesecake Factory on October 8, 2024 and sell it today you would earn a total of  975.00  from holding The Cheesecake Factory or generate 24.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Celsius Holdings  vs.  The Cheesecake Factory

Celsius Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Celsius Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

The Cheesecake Factory

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 12 (%) 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.

Pair Trading with Celsius Holdings and Cheesecake Factory

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

The idea behind Celsius Holdings and The Cheesecake Factory 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.