Correlation Between One Group and Ark Restaurants

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

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

Diversification Opportunities for One Group and Ark Restaurants

0.2

Correlation Coefficient

One Group  Ark Restaurants

Modest diversification

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

Pair Corralation between One Group and Ark Restaurants

Given the investment horizon of 90 days One Group is expected to generate 18.38 times less return on investment than Ark Restaurants. But when comparing it to its historical volatility, One Group Hospitality is 2.3 times less risky than Ark Restaurants. It trades about 0.03 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,036  in Ark Restaurants Corp on September 12, 2024 and sell it today you would earn a total of  343.00  from holding Ark Restaurants Corp or generate 33.11% return on investment over 90 days.

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

One Group Hospitality  vs.  Ark Restaurants Corp

One Group Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Group Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, One Group is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Ark Restaurants Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Group and Ark Restaurants

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

The idea behind One Group Hospitality and Ark Restaurants Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.