Correlation Between Good Life and Kura Sushi

Can any of the company-specific risk be diversified away by investing in both Good Life and Kura Sushi 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 Good Life and Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Good Life China and Kura Sushi USA, you can compare the effects of market volatilities on Good Life and Kura Sushi 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 Good Life with a short position of Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Life and Kura Sushi.

Diversification Opportunities for Good Life and Kura Sushi

0.0

Correlation Coefficient

Good Life  Kura Sushi

Pay attention - limited upside

The 3 months correlation between Good and Kura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Good Life China and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA and Good Life 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 Good Life China are associated (or correlated) with Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Good Life i.e., Good Life and Kura Sushi go up and down completely randomly.

Pair Corralation between Good Life and Kura Sushi

If you would invest  10,183  in Kura Sushi USA on October 8, 2024 and sell it today you would earn a total of  118.00  from holding Kura Sushi USA or generate 1.16% return on investment over 90 days.

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

Good Life China  vs.  Kura Sushi USA

Good Life China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Life China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Good Life is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kura Sushi USA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kura Sushi USA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Kura Sushi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Good Life and Kura Sushi

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

The idea behind Good Life China and Kura Sushi USA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.