Correlation Between Flanigans Enterprises and TH International

Can any of the company-specific risk be diversified away by investing in both Flanigans Enterprises and TH International 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 Flanigans Enterprises and TH International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flanigans Enterprises and TH International Limited, you can compare the effects of market volatilities on Flanigans Enterprises and TH International 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 Flanigans Enterprises with a short position of TH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and TH International.

Diversification Opportunities for Flanigans Enterprises and TH International

-0.3

Correlation Coefficient

Flanigans Enterprises  TH International

Very good diversification

The 3 months correlation between Flanigans and THCH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and TH International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TH International and Flanigans Enterprises 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 Flanigans Enterprises are associated (or correlated) with TH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TH International has no effect on the direction of Flanigans Enterprises i.e., Flanigans Enterprises and TH International go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and TH International

Considering the 90-day investment horizon Flanigans Enterprises is expected to under-perform the TH International. But the stock apears to be less risky and, when comparing its historical volatility, Flanigans Enterprises is 3.05 times less risky than TH International. The stock trades about -0.03 of its potential returns per unit of risk. The TH International Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  63.00  in TH International Limited on September 14, 2024 and sell it today you would earn a total of  1.90  from holding TH International Limited or generate 3.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

Flanigans Enterprises  vs.  TH International Limited

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

TH International

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TH International Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, TH International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Flanigans Enterprises and TH International

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

The idea behind Flanigans Enterprises and TH International Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.