Correlation Between AMC Entertainment and AMC Networks

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

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

Diversification Opportunities for AMC Entertainment and AMC Networks

0.59

Correlation Coefficient

AMC Entertainment  AMC Networks

Very weak diversification

The 3 months correlation between AMC and AMC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and AMC Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Networks and AMC Entertainment 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 AMC Entertainment Holdings are associated (or correlated) with AMC Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Networks has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and AMC Networks go up and down completely randomly.

Pair Corralation between AMC Entertainment and AMC Networks

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to generate 0.91 times more return on investment than AMC Networks. However, AMC Entertainment Holdings is 1.1 times less risky than AMC Networks. It trades about -0.14 of its potential returns per unit of risk. AMC Networks is currently generating about -0.15 per unit of risk. If you would invest  405.00  in AMC Entertainment Holdings on December 26, 2024 and sell it today you would lose (98.00) from holding AMC Entertainment Holdings or give up 24.2% of portfolio value over 90 days.

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

AMC Entertainment Holdings  vs.  AMC Networks

AMC Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AMC Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AMC Entertainment and AMC Networks

The main advantage of trading using opposite AMC Entertainment and AMC Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, AMC Networks 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 AMC Networks will offset losses from the drop in AMC Networks' long position.

The idea behind AMC Entertainment Holdings and AMC Networks 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.