Correlation Between Louisa Professional and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Louisa Professional 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 Louisa Professional and Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisa Professional Coffee and Kura Sushi Asia, you can compare the effects of market volatilities on Louisa Professional 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 Louisa Professional with a short position of Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisa Professional and Kura Sushi.
Diversification Opportunities for Louisa Professional and Kura Sushi
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Louisa and Kura is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Louisa Professional Coffee and Kura Sushi Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi Asia and Louisa Professional 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 Louisa Professional Coffee 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 Asia has no effect on the direction of Louisa Professional i.e., Louisa Professional and Kura Sushi go up and down completely randomly.
Pair Corralation between Louisa Professional and Kura Sushi
Assuming the 90 days trading horizon Louisa Professional Coffee is expected to generate 0.62 times more return on investment than Kura Sushi. However, Louisa Professional Coffee is 1.62 times less risky than Kura Sushi. It trades about -0.01 of its potential returns per unit of risk. Kura Sushi Asia is currently generating about -0.03 per unit of risk. If you would invest 11,289 in Louisa Professional Coffee on September 2, 2024 and sell it today you would lose (1,459) from holding Louisa Professional Coffee or give up 12.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Louisa Professional Coffee vs. Kura Sushi Asia
Performance |
| Timeline |
| Louisa Professional |
| Kura Sushi Asia |
Louisa Professional and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisa Professional and Kura Sushi
The main advantage of trading using opposite Louisa Professional and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisa Professional 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.| Louisa Professional vs. Gourmet Master Co | Louisa Professional vs. Wowprime Corp | Louisa Professional vs. Hi Lai Foods Co | Louisa Professional vs. An Shin Food Services |
| Kura Sushi vs. Gourmet Master Co | Kura Sushi vs. Wowprime Corp | Kura Sushi vs. Hi Lai Foods Co | Kura Sushi vs. Louisa Professional Coffee |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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