Correlation Between 191216CX6 and Ark Restaurants

Can any of the company-specific risk be diversified away by investing in both 191216CX6 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 191216CX6 and Ark Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Ark Restaurants Corp, you can compare the effects of market volatilities on 191216CX6 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 191216CX6 with a short position of Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216CX6 and Ark Restaurants.

Diversification Opportunities for 191216CX6 and Ark Restaurants

-0.01

Correlation Coefficient

191216CX6  Ark Restaurants

Good diversification

The 3 months correlation between 191216CX6 and Ark is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO 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 191216CX6 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 COCA COLA CO 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 191216CX6 i.e., 191216CX6 and Ark Restaurants go up and down completely randomly.

Pair Corralation between 191216CX6 and Ark Restaurants

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 0.52 times more return on investment than Ark Restaurants. However, COCA COLA CO is 1.91 times less risky than Ark Restaurants. It trades about 0.06 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.01 per unit of risk. If you would invest  6,737  in COCA COLA CO on September 25, 2024 and sell it today you would earn a total of  489.00  from holding COCA COLA CO or generate 7.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

COCA COLA CO  vs.  Ark Restaurants Corp

COCA A CO

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 191216CX6 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ark Restaurants Corp

Risk-Adjusted Performance

0 of 100

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 relatively invariable forward-looking signals, Ark Restaurants is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with 191216CX6 and Ark Restaurants

The main advantage of trading using opposite 191216CX6 and Ark Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216CX6 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 COCA COLA CO 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.