Correlation Between Ark Restaurants and Aegean Airlines

Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and Aegean Airlines 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 Ark Restaurants and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ark Restaurants Corp and Aegean Airlines SA, you can compare the effects of market volatilities on Ark Restaurants and Aegean Airlines 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 Ark Restaurants with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and Aegean Airlines.

Diversification Opportunities for Ark Restaurants and Aegean Airlines

0.31

Correlation Coefficient

Ark Restaurants  Aegean Airlines

Weak diversification

The 3 months correlation between Ark and Aegean is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Aegean Airlines go up and down completely randomly.

Pair Corralation between Ark Restaurants and Aegean Airlines

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 2.11 times more return on investment than Aegean Airlines. However, Ark Restaurants is 2.11 times more volatile than Aegean Airlines SA. It trades about 0.0 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.05 per unit of risk. If you would invest  1,470  in Ark Restaurants Corp on September 14, 2024 and sell it today you would lose (155.20) from holding Ark Restaurants Corp or give up 10.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.4%
Values	Daily Returns

Ark Restaurants Corp  vs.  Aegean Airlines SA

Ark Restaurants Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ark Restaurants and Aegean Airlines

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

The idea behind Ark Restaurants Corp and Aegean Airlines SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.