Correlation Between ARK Next and Credit Suisse

Can any of the company-specific risk be diversified away by investing in both ARK Next and Credit Suisse 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 Next and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARK Next Generation and Credit Suisse X Links, you can compare the effects of market volatilities on ARK Next and Credit Suisse 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 Next with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and Credit Suisse.

Diversification Opportunities for ARK Next and Credit Suisse

-0.41

Correlation Coefficient

ARK Next  Credit Suisse

Very good diversification

The 3 months correlation between ARK and Credit is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and Credit Suisse X Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse X and ARK Next 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 Next Generation are associated (or correlated) with Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse X has no effect on the direction of ARK Next i.e., ARK Next and Credit Suisse go up and down completely randomly.

Pair Corralation between ARK Next and Credit Suisse

Given the investment horizon of 90 days ARK Next Generation is expected to generate 1.99 times more return on investment than Credit Suisse. However, ARK Next is 1.99 times more volatile than Credit Suisse X Links. It trades about 0.02 of its potential returns per unit of risk. Credit Suisse X Links is currently generating about -0.21 per unit of risk. If you would invest  11,541  in ARK Next Generation on October 9, 2024 and sell it today you would earn a total of  31.00  from holding ARK Next Generation or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

ARK Next Generation  vs.  Credit Suisse X Links

ARK Next Generation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Next Generation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, ARK Next showed solid returns over the last few months and may actually be approaching a breakup point.

Credit Suisse X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Suisse X Links has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Credit Suisse is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ARK Next and Credit Suisse

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

The idea behind ARK Next Generation and Credit Suisse X Links 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.