Correlation Between SERI INDUSTRIAL and BJs Restaurants

Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL and BJs Restaurants 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 SERI INDUSTRIAL and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SERI INDUSTRIAL EO and BJs Restaurants, you can compare the effects of market volatilities on SERI INDUSTRIAL and BJs Restaurants 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 SERI INDUSTRIAL with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and BJs Restaurants.

Diversification Opportunities for SERI INDUSTRIAL and BJs Restaurants

0.45

Correlation Coefficient

SERI INDUSTRIAL  BJs Restaurants

Very weak diversification

The 3 months correlation between SERI and BJs is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and BJs Restaurants go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and BJs Restaurants

Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the BJs Restaurants. In addition to that, SERI INDUSTRIAL is 1.92 times more volatile than BJs Restaurants. It trades about -0.14 of its total potential returns per unit of risk. BJs Restaurants is currently generating about -0.1 per unit of volatility. If you would invest  3,360  in BJs Restaurants on December 20, 2024 and sell it today you would lose (420.00) from holding BJs Restaurants or give up 12.5% of portfolio value over 90 days.

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

SERI INDUSTRIAL EO  vs.  BJs Restaurants

SERI INDUSTRIAL EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BJs Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days BJs Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SERI INDUSTRIAL and BJs Restaurants

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

The idea behind SERI INDUSTRIAL EO and BJs Restaurants 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.