Correlation Between Cinemark Holdings and Hollywood Intermediate

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

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

Diversification Opportunities for Cinemark Holdings and Hollywood Intermediate

0.0

Correlation Coefficient

Cinemark Holdings  Hollywood Intermediate

Pay attention - limited upside

The 3 months correlation between Cinemark and Hollywood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and Hollywood Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Intermediate and Cinemark Holdings 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 Cinemark Holdings are associated (or correlated) with Hollywood Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Intermediate has no effect on the direction of Cinemark Holdings i.e., Cinemark Holdings and Hollywood Intermediate go up and down completely randomly.

Pair Corralation between Cinemark Holdings and Hollywood Intermediate

Considering the 90-day investment horizon Cinemark Holdings is expected to generate 0.5 times more return on investment than Hollywood Intermediate. However, Cinemark Holdings is 2.0 times less risky than Hollywood Intermediate. It trades about 0.11 of its potential returns per unit of risk. Hollywood Intermediate is currently generating about -0.04 per unit of risk. If you would invest  1,070  in Cinemark Holdings on October 10, 2024 and sell it today you would earn a total of  1,991  from holding Cinemark Holdings or generate 186.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Cinemark Holdings  vs.  Hollywood Intermediate

Cinemark Holdings

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cinemark Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hollywood Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Intermediate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hollywood Intermediate is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cinemark Holdings and Hollywood Intermediate

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

The idea behind Cinemark Holdings and Hollywood Intermediate 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.