Correlation Between Cineplex and Cargojet

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

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

Diversification Opportunities for Cineplex and Cargojet

-0.89

Correlation Coefficient

Cineplex  Cargojet

Pay attention - limited upside

The 3 months correlation between Cineplex and Cargojet is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cineplex and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet and Cineplex 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 Cineplex are associated (or correlated) with Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of Cineplex i.e., Cineplex and Cargojet go up and down completely randomly.

Pair Corralation between Cineplex and Cargojet

Assuming the 90 days trading horizon Cineplex is expected to generate 1.06 times more return on investment than Cargojet. However, Cineplex is 1.06 times more volatile than Cargojet. It trades about 0.05 of its potential returns per unit of risk. Cargojet is currently generating about 0.01 per unit of risk. If you would invest  819.00  in Cineplex on October 12, 2024 and sell it today you would earn a total of  367.00  from holding Cineplex or generate 44.81% return on investment over 90 days.

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

Cineplex  vs.  Cargojet

Cineplex

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cineplex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cineplex displayed solid returns over the last few months and may actually be approaching a breakup point.

Cargojet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cargojet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cineplex and Cargojet

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

The idea behind Cineplex and Cargojet 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.