Correlation Between AMCON Distributing and Organto Foods

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

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

Diversification Opportunities for AMCON Distributing and Organto Foods

-0.33

Correlation Coefficient

AMCON Distributing  Organto Foods

Very good diversification

The 3 months correlation between AMCON and Organto is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Organto Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organto Foods 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 Organto Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organto Foods has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Organto Foods go up and down completely randomly.

Pair Corralation between AMCON Distributing and Organto Foods

Considering the 90-day investment horizon AMCON Distributing is expected to generate 1.32 times more return on investment than Organto Foods. However, AMCON Distributing is 1.32 times more volatile than Organto Foods. It trades about -0.01 of its potential returns per unit of risk. Organto Foods is currently generating about -0.1 per unit of risk. If you would invest  14,322  in AMCON Distributing on August 30, 2024 and sell it today you would lose (840.00) from holding AMCON Distributing or give up 5.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

AMCON Distributing  vs.  Organto Foods

AMCON Distributing

Risk-Adjusted Performance

0 of 100

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 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.

Organto Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Organto Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AMCON Distributing and Organto Foods

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

The idea behind AMCON Distributing and Organto Foods 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.