Correlation Between Cineplex and Dynacor Gold

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

By analyzing existing cross correlation between Cineplex and Dynacor Gold Mines, you can compare the effects of market volatilities on Cineplex and Dynacor Gold 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 Dynacor Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cineplex and Dynacor Gold.

Diversification Opportunities for Cineplex and Dynacor Gold

0.65

Correlation Coefficient

Cineplex  Dynacor Gold

Poor diversification

The 3 months correlation between Cineplex and Dynacor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cineplex and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines 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 Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Cineplex i.e., Cineplex and Dynacor Gold go up and down completely randomly.

Pair Corralation between Cineplex and Dynacor Gold

Assuming the 90 days trading horizon Cineplex is expected to under-perform the Dynacor Gold. But the stock apears to be less risky and, when comparing its historical volatility, Cineplex is 1.19 times less risky than Dynacor Gold. The stock trades about -0.19 of its potential returns per unit of risk. The Dynacor Gold Mines is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Dynacor Gold Mines on December 30, 2024 and sell it today you would lose (70.00) from holding Dynacor Gold Mines or give up 12.52% of portfolio value over 90 days.

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

Cineplex  vs.  Dynacor Gold Mines

Cineplex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cineplex 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dynacor Gold Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynacor Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cineplex and Dynacor Gold

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

The idea behind Cineplex and Dynacor Gold Mines 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.