Correlation Between BTC Digital and Ark Restaurants

Can any of the company-specific risk be diversified away by investing in both BTC Digital and Ark Restaurants 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 BTC Digital and Ark Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTC Digital and Ark Restaurants Corp, you can compare the effects of market volatilities on BTC Digital and Ark Restaurants 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 BTC Digital with a short position of Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Digital and Ark Restaurants.

Diversification Opportunities for BTC Digital and Ark Restaurants

-0.32

Correlation Coefficient

BTC Digital  Ark Restaurants

Very good diversification

The 3 months correlation between BTC and Ark is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BTC Digital and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp and BTC Digital 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 BTC Digital are associated (or correlated) with Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of BTC Digital i.e., BTC Digital and Ark Restaurants go up and down completely randomly.

Pair Corralation between BTC Digital and Ark Restaurants

Assuming the 90 days horizon BTC Digital is expected to generate 2.48 times more return on investment than Ark Restaurants. However, BTC Digital is 2.48 times more volatile than Ark Restaurants Corp. It trades about 0.0 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about -0.04 per unit of risk. If you would invest  6.68  in BTC Digital on October 5, 2024 and sell it today you would lose (1.73) from holding BTC Digital or give up 25.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BTC Digital  vs.  Ark Restaurants Corp

BTC Digital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, BTC Digital showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with BTC Digital and Ark Restaurants

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

The idea behind BTC Digital and Ark Restaurants Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.