Correlation Between Ark Restaurants and Eastern

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

Diversification Opportunities for Ark Restaurants and Eastern

0.32

Correlation Coefficient

Ark Restaurants  Eastern

Weak diversification

The 3 months correlation between Ark and Eastern is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Eastern go up and down completely randomly.

Pair Corralation between Ark Restaurants and Eastern

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 1.99 times more return on investment than Eastern. However, Ark Restaurants is 1.99 times more volatile than Eastern Co. It trades about 0.01 of its potential returns per unit of risk. Eastern Co is currently generating about -0.11 per unit of risk. If you would invest  1,199  in Ark Restaurants Corp on September 30, 2024 and sell it today you would lose (50.00) from holding Ark Restaurants Corp or give up 4.17% of portfolio value over 90 days.

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

Ark Restaurants Corp  vs.  Eastern Co

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.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ark Restaurants and Eastern

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

The idea behind Ark Restaurants Corp and Eastern Co 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.