Correlation Between Kura Sushi and Louisa Professional
Can any of the company-specific risk be diversified away by investing in both Kura Sushi and Louisa Professional 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 Kura Sushi and Louisa Professional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kura Sushi Asia and Louisa Professional Coffee, you can compare the effects of market volatilities on Kura Sushi and Louisa Professional 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 Kura Sushi with a short position of Louisa Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kura Sushi and Louisa Professional.
Diversification Opportunities for Kura Sushi and Louisa Professional
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kura and Louisa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kura Sushi Asia and Louisa Professional Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Louisa Professional and Kura Sushi 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 Kura Sushi Asia are associated (or correlated) with Louisa Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Louisa Professional has no effect on the direction of Kura Sushi i.e., Kura Sushi and Louisa Professional go up and down completely randomly.
Pair Corralation between Kura Sushi and Louisa Professional
Assuming the 90 days trading horizon Kura Sushi is expected to generate 6.5 times less return on investment than Louisa Professional. But when comparing it to its historical volatility, Kura Sushi Asia is 3.23 times less risky than Louisa Professional. It trades about 0.13 of its potential returns per unit of risk. Louisa Professional Coffee is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8,620 in Louisa Professional Coffee on November 4, 2024 and sell it today you would earn a total of 610.00 from holding Louisa Professional Coffee or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kura Sushi Asia vs. Louisa Professional Coffee
Performance |
| Timeline |
| Kura Sushi Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Louisa Professional |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kura Sushi and Louisa Professional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kura Sushi and Louisa Professional
The main advantage of trading using opposite Kura Sushi and Louisa Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kura Sushi position performs unexpectedly, Louisa Professional 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 Louisa Professional will offset losses from the drop in Louisa Professional's long position.The idea behind Kura Sushi Asia and Louisa Professional Coffee 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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