Correlation Between AMCON Distributing and SunCar Technology

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

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

Diversification Opportunities for AMCON Distributing and SunCar Technology

-0.18

Correlation Coefficient

AMCON Distributing  SunCar Technology

Good diversification

The 3 months correlation between AMCON and SunCar is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and SunCar Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCar Technology 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 SunCar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCar Technology has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and SunCar Technology go up and down completely randomly.

Pair Corralation between AMCON Distributing and SunCar Technology

Considering the 90-day investment horizon AMCON Distributing is expected to generate 0.43 times more return on investment than SunCar Technology. However, AMCON Distributing is 2.35 times less risky than SunCar Technology. It trades about -0.02 of its potential returns per unit of risk. SunCar Technology Group is currently generating about -0.01 per unit of risk. If you would invest  13,158  in AMCON Distributing on December 28, 2024 and sell it today you would lose (1,258) from holding AMCON Distributing or give up 9.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.97%
Values	Daily Returns

AMCON Distributing  vs.  SunCar Technology Group

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 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.

SunCar Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunCar Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with AMCON Distributing and SunCar Technology

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

The idea behind AMCON Distributing and SunCar Technology Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.