Correlation Between Ark Restaurants and Stepstone

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

Diversification Opportunities for Ark Restaurants and Stepstone

-0.49

Correlation Coefficient

Ark Restaurants  Stepstone

Very good diversification

The 3 months correlation between Ark and Stepstone is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Stepstone go up and down completely randomly.

Pair Corralation between Ark Restaurants and Stepstone

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Stepstone. In addition to that, Ark Restaurants is 1.84 times more volatile than Stepstone Group. It trades about -0.02 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.1 per unit of volatility. If you would invest  4,505  in Stepstone Group on September 24, 2024 and sell it today you would earn a total of  1,307  from holding Stepstone Group or generate 29.01% return on investment over 90 days.

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

Ark Restaurants Corp  vs.  Stepstone Group

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.

Stepstone Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ark Restaurants and Stepstone

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

The idea behind Ark Restaurants Corp and Stepstone Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.