Correlation Between TEXAS ROADHOUSE and PTT Public

Can any of the company-specific risk be diversified away by investing in both TEXAS ROADHOUSE and PTT Public 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 TEXAS ROADHOUSE and PTT Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TEXAS ROADHOUSE and PTT Public, you can compare the effects of market volatilities on TEXAS ROADHOUSE and PTT Public 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 TEXAS ROADHOUSE with a short position of PTT Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of TEXAS ROADHOUSE and PTT Public.

Diversification Opportunities for TEXAS ROADHOUSE and PTT Public

-0.71

Correlation Coefficient

TEXAS ROADHOUSE  PTT Public

Pay attention - limited upside

The 3 months correlation between TEXAS and PTT is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding TEXAS ROADHOUSE and PTT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Public and TEXAS ROADHOUSE 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 TEXAS ROADHOUSE are associated (or correlated) with PTT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Public has no effect on the direction of TEXAS ROADHOUSE i.e., TEXAS ROADHOUSE and PTT Public go up and down completely randomly.

Pair Corralation between TEXAS ROADHOUSE and PTT Public

Assuming the 90 days trading horizon TEXAS ROADHOUSE is expected to generate 0.92 times more return on investment than PTT Public. However, TEXAS ROADHOUSE is 1.09 times less risky than PTT Public. It trades about 0.12 of its potential returns per unit of risk. PTT Public is currently generating about 0.01 per unit of risk. If you would invest  10,774  in TEXAS ROADHOUSE on October 7, 2024 and sell it today you would earn a total of  6,816  from holding TEXAS ROADHOUSE or generate 63.26% return on investment over 90 days.

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

TEXAS ROADHOUSE  vs.  PTT Public

TEXAS ROADHOUSE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TEXAS ROADHOUSE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PTT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 TEXAS ROADHOUSE and PTT Public

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

The idea behind TEXAS ROADHOUSE and PTT 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.