Correlation Between AMC Entertainment and Gray Television

Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Gray Television 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 Gray Television 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 Gray Television, you can compare the effects of market volatilities on AMC Entertainment and Gray Television 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 Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Gray Television.

Diversification Opportunities for AMC Entertainment and Gray Television

-0.6

Correlation Coefficient

AMC Entertainment  Gray Television

Excellent diversification

The 3 months correlation between AMC and Gray is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television 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 Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Gray Television go up and down completely randomly.

Pair Corralation between AMC Entertainment and Gray Television

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to under-perform the Gray Television. But the stock apears to be less risky and, when comparing its historical volatility, AMC Entertainment Holdings is 1.56 times less risky than Gray Television. The stock trades about -0.04 of its potential returns per unit of risk. The Gray Television is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  451.00  in Gray Television on September 12, 2024 and sell it today you would lose (14.00) from holding Gray Television or give up 3.1% of portfolio value over 90 days.

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

AMC Entertainment Holdings  vs.  Gray Television

AMC Entertainment

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Gray Television

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gray Television is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AMC Entertainment and Gray Television

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

The idea behind AMC Entertainment Holdings and Gray Television 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.