Correlation Between BJs Restaurants and PPHE HOTEL

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

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

Diversification Opportunities for BJs Restaurants and PPHE HOTEL

0.16

Correlation Coefficient

BJs Restaurants  PPHE HOTEL

Average diversification

The 3 months correlation between BJs and PPHE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and BJs Restaurants 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 BJs Restaurants are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and PPHE HOTEL go up and down completely randomly.

Pair Corralation between BJs Restaurants and PPHE HOTEL

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.68 times less return on investment than PPHE HOTEL. In addition to that, BJs Restaurants is 1.34 times more volatile than PPHE HOTEL GROUP. It trades about 0.03 of its total potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.06 per unit of volatility. If you would invest  1,410  in PPHE HOTEL GROUP on October 24, 2024 and sell it today you would earn a total of  90.00  from holding PPHE HOTEL GROUP or generate 6.38% return on investment over 90 days.

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

BJs Restaurants  vs.  PPHE HOTEL GROUP

BJs Restaurants

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BJs Restaurants is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PPHE HOTEL GROUP

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BJs Restaurants and PPHE HOTEL

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

The idea behind BJs Restaurants and PPHE HOTEL GROUP 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..