Correlation Between Ruths Hospitality and Chuys Holdings

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

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

Diversification Opportunities for Ruths Hospitality and Chuys Holdings

0.25

Correlation Coefficient

Ruths Hospitality  Chuys Holdings

Modest diversification

The 3 months correlation between Ruths and Chuys is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ruths Hospitality Group and Chuys Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuys Holdings and Ruths Hospitality 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 Ruths Hospitality Group are associated (or correlated) with Chuys Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuys Holdings has no effect on the direction of Ruths Hospitality i.e., Ruths Hospitality and Chuys Holdings go up and down completely randomly.

Pair Corralation between Ruths Hospitality and Chuys Holdings

If you would invest  4,195  in Chuys Holdings on September 12, 2024 and sell it today you would lose (447.00) from holding Chuys Holdings or give up 10.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.32%
Values	Daily Returns

Ruths Hospitality Group  vs.  Chuys Holdings

Ruths Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ruths Hospitality Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Ruths Hospitality is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Chuys Holdings

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Chuys Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chuys Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ruths Hospitality and Chuys Holdings

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

The idea behind Ruths Hospitality Group and Chuys Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.