Correlation Between Four Seasons and AMCON Distributing

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

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

Diversification Opportunities for Four Seasons and AMCON Distributing

0.02

Correlation Coefficient

Four Seasons  AMCON Distributing

Significant diversification

The 3 months correlation between Four and AMCON is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Four Seasons 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 Four Seasons Education 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 Four Seasons i.e., Four Seasons and AMCON Distributing go up and down completely randomly.

Pair Corralation between Four Seasons and AMCON Distributing

Given the investment horizon of 90 days Four Seasons Education is expected to under-perform the AMCON Distributing. But the stock apears to be less risky and, when comparing its historical volatility, Four Seasons Education is 1.36 times less risky than AMCON Distributing. The stock trades about -0.01 of its potential returns per unit of risk. The AMCON Distributing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,863  in AMCON Distributing on September 27, 2024 and sell it today you would earn a total of  687.00  from holding AMCON Distributing or generate 5.34% return on investment over 90 days.

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

Four Seasons Education  vs.  AMCON Distributing

Four Seasons Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest unfluctuating performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Four Seasons and AMCON Distributing

The main advantage of trading using opposite Four Seasons and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons 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 Four Seasons Education 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.