Correlation Between Alimentation Couchen and Arko Corp

Can any of the company-specific risk be diversified away by investing in both Alimentation Couchen and Arko Corp 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 Alimentation Couchen and Arko Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alimentation Couchen Tard and Arko Corp, you can compare the effects of market volatilities on Alimentation Couchen and Arko Corp 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 Alimentation Couchen with a short position of Arko Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimentation Couchen and Arko Corp.

Diversification Opportunities for Alimentation Couchen and Arko Corp

0.36

Correlation Coefficient

Alimentation Couchen  Arko Corp

Weak diversification

The 3 months correlation between Alimentation and Arko is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alimentation Couchen Tard and Arko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arko Corp and Alimentation Couchen 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 Alimentation Couchen Tard are associated (or correlated) with Arko Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arko Corp has no effect on the direction of Alimentation Couchen i.e., Alimentation Couchen and Arko Corp go up and down completely randomly.

Pair Corralation between Alimentation Couchen and Arko Corp

Assuming the 90 days horizon Alimentation Couchen Tard is expected to generate 0.59 times more return on investment than Arko Corp. However, Alimentation Couchen Tard is 1.68 times less risky than Arko Corp. It trades about -0.01 of its potential returns per unit of risk. Arko Corp is currently generating about -0.09 per unit of risk. If you would invest  5,447  in Alimentation Couchen Tard on October 7, 2024 and sell it today you would lose (34.00) from holding Alimentation Couchen Tard or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alimentation Couchen Tard  vs.  Arko Corp

Alimentation Couchen Tard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alimentation Couchen Tard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alimentation Couchen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Arko Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arko Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alimentation Couchen and Arko Corp

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

The idea behind Alimentation Couchen Tard and Arko 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.