Correlation Between Ark Restaurants and HelloFresh

Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and HelloFresh 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 HelloFresh 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 HelloFresh SE, you can compare the effects of market volatilities on Ark Restaurants and HelloFresh 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 HelloFresh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and HelloFresh.

Diversification Opportunities for Ark Restaurants and HelloFresh

-0.76

Correlation Coefficient

Ark Restaurants  HelloFresh

Pay attention - limited upside

The 3 months correlation between Ark and HelloFresh is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and HelloFresh SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HelloFresh SE 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 HelloFresh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HelloFresh SE has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and HelloFresh go up and down completely randomly.

Pair Corralation between Ark Restaurants and HelloFresh

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the HelloFresh. But the stock apears to be less risky and, when comparing its historical volatility, Ark Restaurants Corp is 3.02 times less risky than HelloFresh. The stock trades about -0.16 of its potential returns per unit of risk. The HelloFresh SE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  798.00  in HelloFresh SE on September 1, 2024 and sell it today you would earn a total of  402.00  from holding HelloFresh SE or generate 50.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Ark Restaurants Corp  vs.  HelloFresh SE

Ark Restaurants Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ark Restaurants Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

HelloFresh SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HelloFresh SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, HelloFresh reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ark Restaurants and HelloFresh

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

The idea behind Ark Restaurants Corp and HelloFresh SE 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.