Correlation Between LuxUrban Hotels and Ark Restaurants

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

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Ark Restaurants Corp, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Ark Restaurants.

Diversification Opportunities for LuxUrban Hotels and Ark Restaurants

-0.13

Correlation Coefficient

LuxUrban Hotels  Ark Restaurants

Good diversification

The 3 months correlation between LuxUrban and Ark is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 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 LuxUrban Hotels 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 LuxUrban Hotels 1300 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 LuxUrban Hotels i.e., LuxUrban Hotels and Ark Restaurants go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Ark Restaurants

Assuming the 90 days horizon LuxUrban Hotels 1300 is expected to under-perform the Ark Restaurants. In addition to that, LuxUrban Hotels is 1.08 times more volatile than Ark Restaurants Corp. It trades about -0.11 of its total potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.07 per unit of volatility. If you would invest  1,175  in Ark Restaurants Corp on October 22, 2024 and sell it today you would earn a total of  216.00  from holding Ark Restaurants Corp or generate 18.38% return on investment over 90 days.

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

LuxUrban Hotels 1300  vs.  Ark Restaurants Corp

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ark Restaurants Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LuxUrban Hotels and Ark Restaurants

The main advantage of trading using opposite LuxUrban Hotels and Ark Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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 LuxUrban Hotels 1300 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.