Correlation Between AMCON Distributing and Cathay Pacific
Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and Cathay Pacific 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 Cathay Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMCON Distributing and Cathay Pacific Airways, you can compare the effects of market volatilities on AMCON Distributing and Cathay Pacific 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 Cathay Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Cathay Pacific.
Diversification Opportunities for AMCON Distributing and Cathay Pacific
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMCON and Cathay is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Cathay Pacific Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Pacific Airways 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 Cathay Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Pacific Airways has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Cathay Pacific go up and down completely randomly.
Pair Corralation between AMCON Distributing and Cathay Pacific
Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the Cathay Pacific. In addition to that, AMCON Distributing is 1.36 times more volatile than Cathay Pacific Airways. It trades about -0.02 of its total potential returns per unit of risk. Cathay Pacific Airways is currently generating about 0.01 per unit of volatility. If you would invest 92.00 in Cathay Pacific Airways on September 1, 2024 and sell it today you would lose (1.00) from holding Cathay Pacific Airways or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 50.41% |
| Values | Daily Returns |
AMCON Distributing vs. Cathay Pacific Airways
Performance |
| Timeline |
| AMCON Distributing |
| Cathay Pacific Airways |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
AMCON Distributing and Cathay Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMCON Distributing and Cathay Pacific
The main advantage of trading using opposite AMCON Distributing and Cathay Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, Cathay Pacific 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 Cathay Pacific will offset losses from the drop in Cathay Pacific's long position.| AMCON Distributing vs. The Chefs Warehouse | AMCON Distributing vs. G Willi Food International | AMCON Distributing vs. SpartanNash Co | AMCON Distributing vs. Calavo Growers |
| Cathay Pacific vs. Finnair Oyj | Cathay Pacific vs. easyJet plc | Cathay Pacific vs. Norse Atlantic ASA | Cathay Pacific vs. Air New Zealand |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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