Correlation Between AMCON Distributing and SunLink Health

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

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

Diversification Opportunities for AMCON Distributing and SunLink Health

-0.02

Correlation Coefficient

AMCON Distributing  SunLink Health

Good diversification

The 3 months correlation between AMCON and SunLink is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems 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 SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and SunLink Health go up and down completely randomly.

Pair Corralation between AMCON Distributing and SunLink Health

Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the SunLink Health. But the stock apears to be less risky and, when comparing its historical volatility, AMCON Distributing is 1.4 times less risky than SunLink Health. The stock trades about -0.02 of its potential returns per unit of risk. The SunLink Health Systems is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  120.00  in SunLink Health Systems on December 26, 2024 and sell it today you would lose (15.00) from holding SunLink Health Systems or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMCON Distributing  vs.  SunLink Health Systems

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.

SunLink Health Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunLink Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SunLink Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and SunLink Health

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

The idea behind AMCON Distributing and SunLink Health Systems 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..