Correlation Between TH International and Bagger Daves

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

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

Diversification Opportunities for TH International and Bagger Daves

0.06

Correlation Coefficient

TH International  Bagger Daves

Significant diversification

The 3 months correlation between THCH and Bagger is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TH International Limited and Bagger Daves Burger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bagger Daves Burger and TH 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 TH International Limited are associated (or correlated) with Bagger Daves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bagger Daves Burger has no effect on the direction of TH International i.e., TH International and Bagger Daves go up and down completely randomly.

Pair Corralation between TH International and Bagger Daves

Given the investment horizon of 90 days TH International Limited is expected to generate 1.07 times more return on investment than Bagger Daves. However, TH International is 1.07 times more volatile than Bagger Daves Burger. It trades about 0.04 of its potential returns per unit of risk. Bagger Daves Burger is currently generating about -0.01 per unit of risk. If you would invest  63.00  in TH International Limited on September 15, 2024 and sell it today you would earn a total of  2.00  from holding TH International Limited or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

TH International Limited  vs.  Bagger Daves Burger

TH International

Risk-Adjusted Performance

2 of 100

Weak

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 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bagger Daves Burger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bagger Daves is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TH International and Bagger Daves

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

The idea behind TH International Limited and Bagger Daves Burger 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.