Correlation Between GigaCloud Technology and AMCON Distributing

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

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

Diversification Opportunities for GigaCloud Technology and AMCON Distributing

0.04

Correlation Coefficient

GigaCloud Technology  AMCON Distributing

Significant diversification

The 3 months correlation between GigaCloud and AMCON is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GigaCloud Technology Class and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and GigaCloud Technology 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 GigaCloud Technology Class are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of GigaCloud Technology i.e., GigaCloud Technology and AMCON Distributing go up and down completely randomly.

Pair Corralation between GigaCloud Technology and AMCON Distributing

Considering the 90-day investment horizon GigaCloud Technology Class is expected to under-perform the AMCON Distributing. But the stock apears to be less risky and, when comparing its historical volatility, GigaCloud Technology Class is 1.13 times less risky than AMCON Distributing. The stock trades about -0.04 of its potential returns per unit of risk. The AMCON Distributing is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13,158  in AMCON Distributing on December 29, 2024 and sell it today you would lose (1,267) from holding AMCON Distributing or give up 9.63% of portfolio value over 90 days.

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

GigaCloud Technology Class  vs.  AMCON Distributing

GigaCloud Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days GigaCloud Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.

Pair Trading with GigaCloud Technology and AMCON Distributing

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

The idea behind GigaCloud Technology Class and AMCON Distributing 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.