Correlation Between AMCON Distributing and Arko Corp

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

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

Diversification Opportunities for AMCON Distributing and Arko Corp

0.21

Correlation Coefficient

AMCON Distributing  Arko Corp

Modest diversification

The 3 months correlation between AMCON and Arko is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Arko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arko Corp and AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing i.e., AMCON Distributing and Arko Corp go up and down completely randomly.

Pair Corralation between AMCON Distributing and Arko Corp

Considering the 90-day investment horizon AMCON Distributing is expected to generate 0.26 times more return on investment than Arko Corp. However, AMCON Distributing is 3.81 times less risky than Arko Corp. It trades about -0.03 of its potential returns per unit of risk. Arko Corp is currently generating about -0.14 per unit of risk. If you would invest  13,456  in AMCON Distributing on December 27, 2024 and sell it today you would lose (1,728) from holding AMCON Distributing or give up 12.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.67%
Values	Daily Returns

AMCON Distributing  vs.  Arko Corp

AMCON Distributing

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Arko Corp

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with AMCON Distributing and Arko Corp

The main advantage of trading using opposite AMCON Distributing and Arko Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing 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 AMCON Distributing 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.