Correlation Between THORNEY TECHS and TEXAS ROADHOUSE

Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and TEXAS ROADHOUSE 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 THORNEY TECHS and TEXAS ROADHOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THORNEY TECHS LTD and TEXAS ROADHOUSE, you can compare the effects of market volatilities on THORNEY TECHS and TEXAS ROADHOUSE 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 THORNEY TECHS with a short position of TEXAS ROADHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and TEXAS ROADHOUSE.

Diversification Opportunities for THORNEY TECHS and TEXAS ROADHOUSE

0.2

Correlation Coefficient

THORNEY TECHS  TEXAS ROADHOUSE

Modest diversification

The 3 months correlation between THORNEY and TEXAS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and TEXAS ROADHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS ROADHOUSE and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with TEXAS ROADHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEXAS ROADHOUSE has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and TEXAS ROADHOUSE go up and down completely randomly.

Pair Corralation between THORNEY TECHS and TEXAS ROADHOUSE

Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 2.79 times more return on investment than TEXAS ROADHOUSE. However, THORNEY TECHS is 2.79 times more volatile than TEXAS ROADHOUSE. It trades about -0.03 of its potential returns per unit of risk. TEXAS ROADHOUSE is currently generating about -0.1 per unit of risk. If you would invest  7.80  in THORNEY TECHS LTD on September 23, 2024 and sell it today you would lose (0.50) from holding THORNEY TECHS LTD or give up 6.41% of portfolio value over 90 days.

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

THORNEY TECHS LTD  vs.  TEXAS ROADHOUSE

THORNEY TECHS LTD

Risk-Adjusted Performance

2 of 100

Weak

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

TEXAS ROADHOUSE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TEXAS ROADHOUSE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TEXAS ROADHOUSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THORNEY TECHS and TEXAS ROADHOUSE

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

The idea behind THORNEY TECHS LTD and TEXAS ROADHOUSE 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.