Correlation Between AMCON Distributing and Ark Restaurants

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

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

Diversification Opportunities for AMCON Distributing and Ark Restaurants

0.6

Correlation Coefficient

AMCON Distributing  Ark Restaurants

Poor diversification

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

Pair Corralation between AMCON Distributing and Ark Restaurants

Considering the 90-day investment horizon AMCON Distributing is expected to generate 1.41 times less return on investment than Ark Restaurants. But when comparing it to its historical volatility, AMCON Distributing is 2.2 times less risky than Ark Restaurants. It trades about 0.19 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. 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 Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AMCON Distributing  vs.  Ark Restaurants Corp

AMCON Distributing

Risk-Adjusted Performance

1 of 100

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 Corp

Risk-Adjusted Performance

1 of 100

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.

Pair Trading with AMCON Distributing and Ark Restaurants

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

The idea behind AMCON Distributing and Ark Restaurants 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.