Correlation Between Continental and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both Continental and Cinemark Holdings 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 Continental and Cinemark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caleres and Cinemark Holdings, you can compare the effects of market volatilities on Continental and Cinemark Holdings 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 Continental with a short position of Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Cinemark Holdings.
Diversification Opportunities for Continental and Cinemark Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Continental and Cinemark is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Continental 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 Caleres are associated (or correlated) with Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of Continental i.e., Continental and Cinemark Holdings go up and down completely randomly.
Pair Corralation between Continental and Cinemark Holdings
Considering the 90-day investment horizon Caleres is expected to under-perform the Cinemark Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Caleres is 1.08 times less risky than Cinemark Holdings. The stock trades about -0.33 of its potential returns per unit of risk. The Cinemark Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,788 in Cinemark Holdings on January 20, 2024 and sell it today you would earn a total of 24.00 from holding Cinemark Holdings or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caleres vs. Cinemark Holdings
Performance |
| Timeline |
| Continental |
| Cinemark Holdings |
Continental and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Cinemark Holdings
The main advantage of trading using opposite Continental and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Cinemark Holdings 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 Cinemark Holdings will offset losses from the drop in Cinemark Holdings' long position.| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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