Correlation Between Ark Restaurants and Chesapeake Energy

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

Diversification Opportunities for Ark Restaurants and Chesapeake Energy

0.01

Correlation Coefficient

Ark Restaurants  Chesapeake Energy

Significant diversification

The 3 months correlation between Ark and Chesapeake is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy 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 Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Chesapeake Energy go up and down completely randomly.

Pair Corralation between Ark Restaurants and Chesapeake Energy

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Chesapeake Energy. In addition to that, Ark Restaurants is 1.28 times more volatile than Chesapeake Energy. It trades about -0.01 of its total potential returns per unit of risk. Chesapeake Energy is currently generating about 0.0 per unit of volatility. If you would invest  7,224  in Chesapeake Energy on September 30, 2024 and sell it today you would lose (820.00) from holding Chesapeake Energy or give up 11.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.98%
Values	Daily Returns

Ark Restaurants Corp  vs.  Chesapeake Energy

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 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.

Chesapeake Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Chesapeake Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ark Restaurants and Chesapeake Energy

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

The idea behind Ark Restaurants Corp and Chesapeake Energy 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 Stocks Directory module to find actively traded stocks across global markets.