Correlation Between Universal and Ark Restaurants

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Can any of the company-specific risk be diversified away by investing in both Universal 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 Universal and Ark Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Ark Restaurants Corp, you can compare the effects of market volatilities on Universal 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 Universal with a short position of Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Ark Restaurants.

Diversification Opportunities for Universal and Ark Restaurants

UniversalArkDiversified AwayUniversalArkDiversified Away100%
-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Universal and Ark is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Universal 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 Universal 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 Universal 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 Universal i.e., Universal and Ark Restaurants go up and down completely randomly.

Pair Corralation between Universal and Ark Restaurants

Considering the 90-day investment horizon Universal is expected to generate 0.52 times more return on investment than Ark Restaurants. However, Universal is 1.92 times less risky than Ark Restaurants. It trades about 0.02 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.01 per unit of risk. If you would invest  4,759  in Universal on October 15, 2024 and sell it today you would earn a total of  272.00  from holding Universal or generate 5.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.59%
ValuesDaily Returns

Universal  vs.  Ark Restaurants Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1001020
JavaScript chart by amCharts 3.21.15UVV ARKR
       Timeline  
Universal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Universal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5052545658
Ark Restaurants Corp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 7 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1011121314151617

Universal and Ark Restaurants Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.21-1.66-1.11-0.56-0.020.491.041.592.142.69 0.050.100.150.20
JavaScript chart by amCharts 3.21.15UVV ARKR
       Returns  

Pair Trading with Universal and Ark Restaurants

The main advantage of trading using opposite Universal and Ark Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal 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 Universal 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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