Correlation Between BJs Restaurants and Perma Fix

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

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

Diversification Opportunities for BJs Restaurants and Perma Fix

0.12

Correlation Coefficient

BJs Restaurants  Perma Fix

Average diversification

The 3 months correlation between BJs and Perma is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of BJs Restaurants i.e., BJs Restaurants and Perma Fix go up and down completely randomly.

Pair Corralation between BJs Restaurants and Perma Fix

Assuming the 90 days trading horizon BJs Restaurants is expected to generate 2.74 times less return on investment than Perma Fix. But when comparing it to its historical volatility, BJs Restaurants is 1.66 times less risky than Perma Fix. It trades about 0.02 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  655.00  in Perma Fix Environmental Services on November 20, 2024 and sell it today you would earn a total of  225.00  from holding Perma Fix Environmental Services or generate 34.35% 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.  Perma Fix Environmental Servic

BJs Restaurants

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 3 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Perma Fix Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BJs Restaurants and Perma Fix

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

The idea behind BJs Restaurants and Perma Fix Environmental Services 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 Global Correlations module to find global opportunities by holding instruments from different markets.