Correlation Between Ark Restaurants and AMCON Distributing

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

Diversification Opportunities for Ark Restaurants and AMCON Distributing

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ark and AMCON is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and AMCON Distributing go up and down completely randomly.

Pair Corralation between Ark Restaurants and AMCON Distributing

Given the investment horizon of 90 days Ark Restaurants Corp is expected to generate 2.2 times more return on investment than AMCON Distributing. However, Ark Restaurants is 2.2 times more volatile than AMCON Distributing. It trades about 0.12 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.19 per unit of risk. If you would invest  1,025  in Ark Restaurants Corp on September 19, 2024 and sell it today you would earn a total of  154.00  from holding Ark Restaurants Corp or generate 15.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ark Restaurants Corp  vs.  AMCON Distributing

 Performance 
       Timeline  
Ark Restaurants Corp 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Ark Restaurants is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
AMCON Distributing 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in AMCON Distributing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ark Restaurants and AMCON Distributing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ark Restaurants and AMCON Distributing

The main advantage of trading using opposite Ark Restaurants and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.
The idea behind Ark Restaurants Corp and AMCON Distributing 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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