Correlation Between AMCON Distributing and 251566AA3

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and 251566AA3 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 251566AA3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and DT 3625 21 JAN 50, you can compare the effects of market volatilities on AMCON Distributing and 251566AA3 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 251566AA3. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and 251566AA3.

Diversification Opportunities for AMCON Distributing and 251566AA3

0.22

Correlation Coefficient

AMCON Distributing  251566AA3

Modest diversification

The 3 months correlation between AMCON and 251566AA3 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and DT 3625 21 JAN 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT 3625 21 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 251566AA3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT 3625 21 has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and 251566AA3 go up and down completely randomly.

Pair Corralation between AMCON Distributing and 251566AA3

Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the 251566AA3. But the stock apears to be less risky and, when comparing its historical volatility, AMCON Distributing is 3.12 times less risky than 251566AA3. The stock trades about -0.17 of its potential returns per unit of risk. The DT 3625 21 JAN 50 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,563  in DT 3625 21 JAN 50 on October 8, 2024 and sell it today you would lose (98.00) from holding DT 3625 21 JAN 50 or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.89%
Values	Daily Returns

AMCON Distributing  vs.  DT 3625 21 JAN 50

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.

DT 3625 21

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DT 3625 21 JAN 50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 251566AA3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and 251566AA3

The main advantage of trading using opposite AMCON Distributing and 251566AA3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, 251566AA3 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 251566AA3 will offset losses from the drop in 251566AA3's long position.

The idea behind AMCON Distributing and DT 3625 21 JAN 50 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.