Correlation Between Ark Restaurants and Universal

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

Diversification Opportunities for Ark Restaurants and Universal

0.01

Correlation Coefficient

Ark Restaurants  Universal

Significant diversification

The 3 months correlation between Ark and Universal is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Universal go up and down completely randomly.

Pair Corralation between Ark Restaurants and Universal

Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Universal. In addition to that, Ark Restaurants is 2.84 times more volatile than Universal. It trades about -0.02 of its total potential returns per unit of risk. Universal is currently generating about 0.1 per unit of volatility. If you would invest  4,649  in Universal on September 24, 2024 and sell it today you would earn a total of  814.00  from holding Universal or generate 17.51% return on investment over 90 days.

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

Ark Restaurants Corp  vs.  Universal

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.

Universal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ark Restaurants and Universal

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

The idea behind Ark Restaurants Corp and Universal 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .