Correlation Between Ark Restaurants and Playstudios

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

Diversification Opportunities for Ark Restaurants and Playstudios

0.3

Correlation Coefficient

Ark Restaurants  Playstudios

Weak diversification

The 3 months correlation between Ark and Playstudios is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios 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 Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Playstudios go up and down completely randomly.

Pair Corralation between Ark Restaurants and Playstudios

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 0.8 times more return on investment than Playstudios. However, Ark Restaurants Corp is 1.25 times less risky than Playstudios. It trades about -0.01 of its potential returns per unit of risk. Playstudios is currently generating about -0.02 per unit of risk. If you would invest  1,549  in Ark Restaurants Corp on September 20, 2024 and sell it today you would lose (475.00) from holding Ark Restaurants Corp or give up 30.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.59%
Values	Daily Returns

Ark Restaurants Corp  vs.  Playstudios

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 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.

Playstudios

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ark Restaurants and Playstudios

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

The idea behind Ark Restaurants Corp and Playstudios 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.