Correlation Between Ark Restaurants and Enel Chile

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

Diversification Opportunities for Ark Restaurants and Enel Chile

-0.65

Correlation Coefficient

Ark Restaurants  Enel Chile

Excellent diversification

The 3 months correlation between Ark and Enel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA 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 Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Enel Chile go up and down completely randomly.

Pair Corralation between Ark Restaurants and Enel Chile

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Enel Chile. In addition to that, Ark Restaurants is 2.81 times more volatile than Enel Chile SA. It trades about -0.04 of its total potential returns per unit of risk. Enel Chile SA is currently generating about 0.15 per unit of volatility. If you would invest  295.00  in Enel Chile SA on December 25, 2024 and sell it today you would earn a total of  43.00  from holding Enel Chile SA or generate 14.58% return on investment over 90 days.

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

Ark Restaurants Corp  vs.  Enel Chile SA

Ark Restaurants Corp

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Enel Chile SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Enel Chile exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ark Restaurants and Enel Chile

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

The idea behind Ark Restaurants Corp and Enel Chile SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.