Correlation Between Travelzoo and Cinemark Holdings

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

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

Diversification Opportunities for Travelzoo and Cinemark Holdings

0.35

Correlation Coefficient

Travelzoo  Cinemark Holdings

Weak diversification

The 3 months correlation between Travelzoo and Cinemark is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Travelzoo and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Travelzoo 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 Travelzoo 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 Travelzoo i.e., Travelzoo and Cinemark Holdings go up and down completely randomly.

Pair Corralation between Travelzoo and Cinemark Holdings

Given the investment horizon of 90 days Travelzoo is expected to under-perform the Cinemark Holdings. In addition to that, Travelzoo is 1.49 times more volatile than Cinemark Holdings. It trades about -0.03 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about 0.06 per unit of volatility. If you would invest  1,643  in Cinemark Holdings on February 20, 2024 and sell it today you would earn a total of  125.00  from holding Cinemark Holdings or generate 7.61% return on investment over 90 days.

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

Travelzoo  vs.  Cinemark Holdings

Travelzoo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Travelzoo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Travelzoo is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Cinemark Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Cinemark Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Travelzoo and Cinemark Holdings

The main advantage of trading using opposite Travelzoo and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelzoo 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.

The idea behind Travelzoo and Cinemark Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.