Correlation Between Texas Roadhouse and Cheche Group

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

By analyzing existing cross correlation between Texas Roadhouse and Cheche Group Class, you can compare the effects of market volatilities on Texas Roadhouse and Cheche Group 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 Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Roadhouse and Cheche Group.

Diversification Opportunities for Texas Roadhouse and Cheche Group

0.14

Correlation Coefficient

Texas Roadhouse  Cheche Group

Average diversification

The 3 months correlation between Texas and Cheche is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Texas Roadhouse and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group Class 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 Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of Texas Roadhouse i.e., Texas Roadhouse and Cheche Group go up and down completely randomly.

Pair Corralation between Texas Roadhouse and Cheche Group

Given the investment horizon of 90 days Texas Roadhouse is expected to under-perform the Cheche Group. But the stock apears to be less risky and, when comparing its historical volatility, Texas Roadhouse is 2.83 times less risky than Cheche Group. The stock trades about -0.18 of its potential returns per unit of risk. The Cheche Group Class is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Cheche Group Class on October 26, 2024 and sell it today you would lose (0.04) from holding Cheche Group Class or give up 0.05% of portfolio value over 90 days.

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

Texas Roadhouse  vs.  Cheche Group Class

Texas Roadhouse

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cheche Group Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cheche Group Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Cheche Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Roadhouse and Cheche Group

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

The idea behind Texas Roadhouse and Cheche Group Class 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.