Correlation Between Cheesecake Factory and Playtika Holding

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

By analyzing existing cross correlation between The Cheesecake Factory and Playtika Holding Corp, you can compare the effects of market volatilities on Cheesecake Factory and Playtika 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 Cheesecake Factory with a short position of Playtika Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheesecake Factory and Playtika Holding.

Diversification Opportunities for Cheesecake Factory and Playtika Holding

0.87

Correlation Coefficient

Cheesecake Factory  Playtika Holding

Very poor diversification

The 3 months correlation between Cheesecake and Playtika is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Cheesecake Factory and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp and Cheesecake Factory 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 The Cheesecake Factory are associated (or correlated) with Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Cheesecake Factory i.e., Cheesecake Factory and Playtika Holding go up and down completely randomly.

Pair Corralation between Cheesecake Factory and Playtika Holding

Given the investment horizon of 90 days The Cheesecake Factory is expected to generate 1.6 times more return on investment than Playtika Holding. However, Cheesecake Factory is 1.6 times more volatile than Playtika Holding Corp. It trades about 0.19 of its potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.15 per unit of risk. If you would invest  3,871  in The Cheesecake Factory on September 1, 2024 and sell it today you would earn a total of  1,193  from holding The Cheesecake Factory or generate 30.82% return on investment over 90 days.

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

The Cheesecake Factory  vs.  Playtika Holding Corp

The Cheesecake Factory

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Cheesecake Factory are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Cheesecake Factory exhibited solid returns over the last few months and may actually be approaching a breakup point.

Playtika Holding Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cheesecake Factory and Playtika Holding

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

The idea behind The Cheesecake Factory and Playtika Holding Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.