Correlation Between COMBA TELECOM and Texas Roadhouse

Can any of the company-specific risk be diversified away by investing in both COMBA TELECOM and Texas Roadhouse 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 COMBA TELECOM and Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COMBA TELECOM SYST and Texas Roadhouse, you can compare the effects of market volatilities on COMBA TELECOM and Texas Roadhouse 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 COMBA TELECOM with a short position of Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMBA TELECOM and Texas Roadhouse.

Diversification Opportunities for COMBA TELECOM and Texas Roadhouse

-0.64

Correlation Coefficient

COMBA TELECOM  Texas Roadhouse

Excellent diversification

The 3 months correlation between COMBA and Texas is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse and COMBA TELECOM 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 COMBA TELECOM SYST are associated (or correlated) with Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of COMBA TELECOM i.e., COMBA TELECOM and Texas Roadhouse go up and down completely randomly.

Pair Corralation between COMBA TELECOM and Texas Roadhouse

Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to generate 2.11 times more return on investment than Texas Roadhouse. However, COMBA TELECOM is 2.11 times more volatile than Texas Roadhouse. It trades about 0.26 of its potential returns per unit of risk. Texas Roadhouse is currently generating about -0.09 per unit of risk. If you would invest  13.00  in COMBA TELECOM SYST on December 21, 2024 and sell it today you would earn a total of  10.00  from holding COMBA TELECOM SYST or generate 76.92% return on investment over 90 days.

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

COMBA TELECOM SYST  vs.  Texas Roadhouse

COMBA TELECOM SYST

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, COMBA TELECOM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Texas Roadhouse

Risk-Adjusted Performance

Very Weak

Over the last 90 days Texas Roadhouse has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COMBA TELECOM and Texas Roadhouse

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

The idea behind COMBA TELECOM SYST and Texas Roadhouse 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.