Correlation Between Cracker Barrel and Relief Therapeutics

Can any of the company-specific risk be diversified away by investing in both Cracker Barrel and Relief Therapeutics 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 Cracker Barrel and Relief Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cracker Barrel Old and Relief Therapeutics Holding, you can compare the effects of market volatilities on Cracker Barrel and Relief Therapeutics 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 Cracker Barrel with a short position of Relief Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Relief Therapeutics.

Diversification Opportunities for Cracker Barrel and Relief Therapeutics

0.02

Correlation Coefficient

Cracker Barrel  Relief Therapeutics

Significant diversification

The 3 months correlation between Cracker and Relief is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Relief Therapeutics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relief Therapeutics and Cracker Barrel 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 Cracker Barrel Old are associated (or correlated) with Relief Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relief Therapeutics has no effect on the direction of Cracker Barrel i.e., Cracker Barrel and Relief Therapeutics go up and down completely randomly.

Pair Corralation between Cracker Barrel and Relief Therapeutics

If you would invest  4,309  in Cracker Barrel Old on September 24, 2024 and sell it today you would earn a total of  874.00  from holding Cracker Barrel Old or generate 20.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Cracker Barrel Old  vs.  Relief Therapeutics Holding

Cracker Barrel Old

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Relief Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Relief Therapeutics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Relief Therapeutics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cracker Barrel and Relief Therapeutics

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

The idea behind Cracker Barrel Old and Relief Therapeutics Holding 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.