Correlation Between BJs Restaurants and REGAL ASIAN

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

By analyzing existing cross correlation between BJs Restaurants and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on BJs Restaurants and REGAL ASIAN 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 REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and REGAL ASIAN.

Diversification Opportunities for BJs Restaurants and REGAL ASIAN

-0.1

Correlation Coefficient

BJs Restaurants  REGAL ASIAN

Good diversification

The 3 months correlation between BJs and REGAL is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS 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 REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and REGAL ASIAN go up and down completely randomly.

Pair Corralation between BJs Restaurants and REGAL ASIAN

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.67 times more return on investment than REGAL ASIAN. However, BJs Restaurants is 1.67 times more volatile than REGAL ASIAN INVESTMENTS. It trades about -0.12 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.43 per unit of risk. If you would invest  3,540  in BJs Restaurants on September 25, 2024 and sell it today you would lose (200.00) from holding BJs Restaurants or give up 5.65% of portfolio value over 90 days.

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

BJs Restaurants  vs.  REGAL ASIAN INVESTMENTS

BJs Restaurants

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BJs Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental 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 BJs Restaurants and REGAL ASIAN

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

The idea behind BJs Restaurants and REGAL ASIAN INVESTMENTS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.