Correlation Between AMCON Distributing and Sligro Food

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

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

Diversification Opportunities for AMCON Distributing and Sligro Food

0.25

Correlation Coefficient

AMCON Distributing  Sligro Food

Modest diversification

The 3 months correlation between AMCON and Sligro is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Sligro Food go up and down completely randomly.

Pair Corralation between AMCON Distributing and Sligro Food

Considering the 90-day investment horizon AMCON Distributing is expected to generate 2.38 times more return on investment than Sligro Food. However, AMCON Distributing is 2.38 times more volatile than Sligro Food Group. It trades about 0.03 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.07 per unit of risk. If you would invest  13,981  in AMCON Distributing on September 5, 2024 and sell it today you would earn a total of  319.00  from holding AMCON Distributing or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

AMCON Distributing  vs.  Sligro Food Group

AMCON Distributing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMCON Distributing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, AMCON Distributing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AMCON Distributing and Sligro Food

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

The idea behind AMCON Distributing and Sligro Food 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.