Correlation Between Dynacor Gold and Cineplex

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

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

Diversification Opportunities for Dynacor Gold and Cineplex

0.38

Correlation Coefficient

Dynacor Gold  Cineplex

Weak diversification

The 3 months correlation between Dynacor and Cineplex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dynacor Gold Mines and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex and Dynacor Gold 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 Dynacor Gold Mines are associated (or correlated) with Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Dynacor Gold i.e., Dynacor Gold and Cineplex go up and down completely randomly.

Pair Corralation between Dynacor Gold and Cineplex

Assuming the 90 days trading horizon Dynacor Gold is expected to generate 1.04 times less return on investment than Cineplex. In addition to that, Dynacor Gold is 1.01 times more volatile than Cineplex. It trades about 0.17 of its total potential returns per unit of risk. Cineplex is currently generating about 0.18 per unit of volatility. If you would invest  1,073  in Cineplex on September 14, 2024 and sell it today you would earn a total of  222.00  from holding Cineplex or generate 20.69% return on investment over 90 days.

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

Dynacor Gold Mines  vs.  Cineplex

Dynacor Gold Mines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynacor Gold Mines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Dynacor Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Cineplex

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cineplex are ranked lower than 13 (%) 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.

Pair Trading with Dynacor Gold and Cineplex

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

The idea behind Dynacor Gold Mines and Cineplex 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.