Correlation Between Cinemark Holdings and News Corp

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

By analyzing existing cross correlation between Cinemark Holdings and News Corp A, you can compare the effects of market volatilities on Cinemark Holdings and News Corp 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 News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinemark Holdings and News Corp.

Diversification Opportunities for Cinemark Holdings and News Corp

0.85

Correlation Coefficient

Cinemark Holdings  News Corp

Very poor diversification

The 3 months correlation between Cinemark and News is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and News Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp A 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp A has no effect on the direction of Cinemark Holdings i.e., Cinemark Holdings and News Corp go up and down completely randomly.

Pair Corralation between Cinemark Holdings and News Corp

Considering the 90-day investment horizon Cinemark Holdings is expected to generate 1.67 times more return on investment than News Corp. However, Cinemark Holdings is 1.67 times more volatile than News Corp A. It trades about 0.21 of its potential returns per unit of risk. News Corp A is currently generating about 0.13 per unit of risk. If you would invest  2,725  in Cinemark Holdings on September 2, 2024 and sell it today you would earn a total of  727.00  from holding Cinemark Holdings or generate 26.68% return on investment over 90 days.

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

Cinemark Holdings  vs.  News Corp A

Cinemark Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cinemark Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

News Corp A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, News Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cinemark Holdings and News Corp

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

The idea behind Cinemark Holdings and News Corp A 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.