Correlation Between Brinker International and Pruksa Holding

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

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

Diversification Opportunities for Brinker International and Pruksa Holding

-0.68

Correlation Coefficient

Brinker International  Pruksa Holding

Excellent diversification

The 3 months correlation between Brinker and Pruksa is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Pruksa Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pruksa Holding Public and Brinker International 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 Brinker International are associated (or correlated) with Pruksa Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pruksa Holding Public has no effect on the direction of Brinker International i.e., Brinker International and Pruksa Holding go up and down completely randomly.

Pair Corralation between Brinker International and Pruksa Holding

Assuming the 90 days horizon Brinker International is expected to generate 1.28 times more return on investment than Pruksa Holding. However, Brinker International is 1.28 times more volatile than Pruksa Holding Public. It trades about 0.12 of its potential returns per unit of risk. Pruksa Holding Public is currently generating about -0.04 per unit of risk. If you would invest  2,980  in Brinker International on September 23, 2024 and sell it today you would earn a total of  9,720  from holding Brinker International or generate 326.17% return on investment over 90 days.

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

Brinker International  vs.  Pruksa Holding Public

Brinker International

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brinker International reported solid returns over the last few months and may actually be approaching a breakup point.

Pruksa Holding Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pruksa Holding Public 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Brinker International and Pruksa Holding

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

The idea behind Brinker International and Pruksa Holding Public 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.