Correlation Between ICC Holdings and AMCON Distributing

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

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

Diversification Opportunities for ICC Holdings and AMCON Distributing

-0.37

Correlation Coefficient

ICC Holdings  AMCON Distributing

Very good diversification

The 3 months correlation between ICC and AMCON is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and ICC Holdings 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 ICC Holdings 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 ICC Holdings i.e., ICC Holdings and AMCON Distributing go up and down completely randomly.

Pair Corralation between ICC Holdings and AMCON Distributing

Given the investment horizon of 90 days ICC Holdings is expected to generate 22.55 times more return on investment than AMCON Distributing. However, ICC Holdings is 22.55 times more volatile than AMCON Distributing. It trades about 0.07 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.02 per unit of risk. If you would invest  1,600  in ICC Holdings on September 13, 2024 and sell it today you would earn a total of  722.00  from holding ICC Holdings or generate 45.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.07%
Values	Daily Returns

ICC Holdings  vs.  AMCON Distributing

ICC Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ICC Holdings and AMCON Distributing

The main advantage of trading using opposite ICC Holdings and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICC Holdings 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 ICC Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.