Correlation Between AMCON Distributing and Amgen

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

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

Diversification Opportunities for AMCON Distributing and Amgen

0.6

Correlation Coefficient

AMCON Distributing  Amgen

Poor diversification

The 3 months correlation between AMCON and Amgen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Amgen go up and down completely randomly.

Pair Corralation between AMCON Distributing and Amgen

Considering the 90-day investment horizon AMCON Distributing is expected to generate 2.2 times more return on investment than Amgen. However, AMCON Distributing is 2.2 times more volatile than Amgen Inc. It trades about -0.01 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.15 per unit of risk. If you would invest  14,322  in AMCON Distributing on August 30, 2024 and sell it today you would lose (840.00) from holding AMCON Distributing or give up 5.87% of portfolio value over 90 days.

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

AMCON Distributing  vs.  Amgen Inc

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.

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AMCON Distributing and Amgen

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

The idea behind AMCON Distributing and Amgen Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.