Correlation Between Ark Restaurants and Philip Morris

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

Diversification Opportunities for Ark Restaurants and Philip Morris

-0.24

Correlation Coefficient

Ark Restaurants  Philip Morris

Very good diversification

The 3 months correlation between Ark and Philip is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern 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 Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Philip Morris go up and down completely randomly.

Pair Corralation between Ark Restaurants and Philip Morris

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Philip Morris. In addition to that, Ark Restaurants is 2.78 times more volatile than Philip Morris International. It trades about -0.02 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.12 per unit of volatility. If you would invest  10,083  in Philip Morris International on September 24, 2024 and sell it today you would earn a total of  2,339  from holding Philip Morris International or generate 23.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Ark Restaurants Corp  vs.  Philip Morris International

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.

Philip Morris Intern

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Philip Morris is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ark Restaurants and Philip Morris

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

The idea behind Ark Restaurants Corp and Philip Morris International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.