Correlation Between Ark Restaurants and Kura Sushi

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

Diversification Opportunities for Ark Restaurants and Kura Sushi

-0.04

Correlation Coefficient

Ark Restaurants  Kura Sushi

Good diversification

The 3 months correlation between Ark and Kura is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Kura Sushi go up and down completely randomly.

Pair Corralation between Ark Restaurants and Kura Sushi

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 3.41 times more return on investment than Kura Sushi. However, Ark Restaurants is 3.41 times more volatile than Kura Sushi USA. It trades about 0.11 of its potential returns per unit of risk. Kura Sushi USA is currently generating about -0.25 per unit of risk. If you would invest  1,001  in Ark Restaurants Corp on September 24, 2024 and sell it today you would earn a total of  128.00  from holding Ark Restaurants Corp or generate 12.79% return on investment over 90 days.

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

Ark Restaurants Corp  vs.  Kura Sushi USA

Ark Restaurants Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Kura Sushi USA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kura Sushi USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kura Sushi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ark Restaurants and Kura Sushi

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

The idea behind Ark Restaurants Corp and Kura Sushi USA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.