Correlation Between ALPS Emerging and Cinemark Holdings

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

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

Diversification Opportunities for ALPS Emerging and Cinemark Holdings

-0.66

Correlation Coefficient

ALPS Emerging  Cinemark Holdings

Excellent diversification

The 3 months correlation between ALPS and Cinemark is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ALPS Emerging Sector and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and ALPS Emerging 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 ALPS Emerging Sector are associated (or correlated) with Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of ALPS Emerging i.e., ALPS Emerging and Cinemark Holdings go up and down completely randomly.

Pair Corralation between ALPS Emerging and Cinemark Holdings

Given the investment horizon of 90 days ALPS Emerging is expected to generate 7.81 times less return on investment than Cinemark Holdings. But when comparing it to its historical volatility, ALPS Emerging Sector is 2.12 times less risky than Cinemark Holdings. It trades about 0.04 of its potential returns per unit of risk. Cinemark Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,860  in Cinemark Holdings on September 12, 2024 and sell it today you would earn a total of  501.00  from holding Cinemark Holdings or generate 17.52% return on investment over 90 days.

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

ALPS Emerging Sector  vs.  Cinemark Holdings

ALPS Emerging Sector

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS Emerging Sector are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALPS Emerging is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cinemark Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Cinemark Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALPS Emerging and Cinemark Holdings

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

The idea behind ALPS Emerging Sector and Cinemark Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.