Correlation Between Ark Restaurants and NESNVX

Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and NESNVX 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 NESNVX 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 NESNVX 39 24 SEP 38, you can compare the effects of market volatilities on Ark Restaurants and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and NESNVX.

Diversification Opportunities for Ark Restaurants and NESNVX

0.28

Correlation Coefficient

Ark Restaurants  NESNVX

Modest diversification

The 3 months correlation between Ark and NESNVX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and NESNVX 39 24 SEP 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 24 SEP 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 24 SEP has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and NESNVX go up and down completely randomly.

Pair Corralation between Ark Restaurants and NESNVX

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 4.63 times more return on investment than NESNVX. However, Ark Restaurants is 4.63 times more volatile than NESNVX 39 24 SEP 38. It trades about 0.09 of its potential returns per unit of risk. NESNVX 39 24 SEP 38 is currently generating about -0.32 per unit of risk. If you would invest  1,010  in Ark Restaurants Corp on September 21, 2024 and sell it today you would earn a total of  99.50  from holding Ark Restaurants Corp or generate 9.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	68.18%
Values	Daily Returns

Ark Restaurants Corp  vs.  NESNVX 39 24 SEP 38

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 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.

NESNVX 24 SEP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 39 24 SEP 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 39 24 SEP 38 investors.

Pair Trading with Ark Restaurants and NESNVX

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

The idea behind Ark Restaurants Corp and NESNVX 39 24 SEP 38 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.