Correlation Between Kura Sushi and GENERAL

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

By analyzing existing cross correlation between Kura Sushi USA and GENERAL ELEC CAP, you can compare the effects of market volatilities on Kura Sushi and GENERAL 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 Kura Sushi with a short position of GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kura Sushi and GENERAL.

Diversification Opportunities for Kura Sushi and GENERAL

0.5

Correlation Coefficient

Kura Sushi  GENERAL

Very weak diversification

The 3 months correlation between Kura and GENERAL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kura Sushi USA and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP and Kura Sushi 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 Kura Sushi USA are associated (or correlated) with GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Kura Sushi i.e., Kura Sushi and GENERAL go up and down completely randomly.

Pair Corralation between Kura Sushi and GENERAL

Given the investment horizon of 90 days Kura Sushi USA is expected to generate 2.54 times more return on investment than GENERAL. However, Kura Sushi is 2.54 times more volatile than GENERAL ELEC CAP. It trades about 0.12 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about -0.26 per unit of risk. If you would invest  7,733  in Kura Sushi USA on September 15, 2024 and sell it today you would earn a total of  1,960  from holding Kura Sushi USA or generate 25.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	31.25%
Values	Daily Returns

Kura Sushi USA  vs.  GENERAL ELEC CAP

Kura Sushi USA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kura Sushi USA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kura Sushi unveiled solid returns over the last few months and may actually be approaching a breakup point.

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for GENERAL ELEC CAP investors.

Pair Trading with Kura Sushi and GENERAL

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

The idea behind Kura Sushi USA and GENERAL ELEC CAP 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.