Correlation Between AMC Networks and AMC Entertainment

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

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

Diversification Opportunities for AMC Networks and AMC Entertainment

0.59

Correlation Coefficient

AMC Networks  AMC Entertainment

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 Networks and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and AMC Networks 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 Networks are associated (or correlated) with AMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Entertainment has no effect on the direction of AMC Networks i.e., AMC Networks and AMC Entertainment go up and down completely randomly.

Pair Corralation between AMC Networks and AMC Entertainment

Given the investment horizon of 90 days AMC Networks is expected to under-perform the AMC Entertainment. In addition to that, AMC Networks is 1.1 times more volatile than AMC Entertainment Holdings. It trades about -0.15 of its total potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.14 per unit of volatility. 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 Networks  vs.  AMC Entertainment Holdings

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.

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.

Pair Trading with AMC Networks and AMC Entertainment

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

The idea behind AMC Networks and AMC Entertainment 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.