Correlation Between Fuji Media and Cinemark Holdings

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

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

Diversification Opportunities for Fuji Media and Cinemark Holdings

-0.47

Correlation Coefficient

Fuji Media  Cinemark Holdings

Very good diversification

The 3 months correlation between Fuji and Cinemark is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Media Holdings and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Fuji Media 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 Fuji Media Holdings 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 Fuji Media i.e., Fuji Media and Cinemark Holdings go up and down completely randomly.

Pair Corralation between Fuji Media and Cinemark Holdings

Assuming the 90 days horizon Fuji Media is expected to generate 11.48 times less return on investment than Cinemark Holdings. In addition to that, Fuji Media is 1.02 times more volatile than Cinemark Holdings. It trades about 0.03 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about 0.33 per unit of volatility. If you would invest  1,506  in Cinemark Holdings on September 4, 2024 and sell it today you would earn a total of  1,911  from holding Cinemark Holdings or generate 126.89% return on investment over 90 days.

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

Fuji Media Holdings  vs.  Cinemark Holdings

Fuji Media Holdings

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fuji Media 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

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cinemark Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fuji Media and Cinemark Holdings

The main advantage of trading using opposite Fuji Media and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuji Media 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 Fuji Media Holdings 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.