Correlation Between Impact Growth and Major Cineplex

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

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

Diversification Opportunities for Impact Growth and Major Cineplex

-0.18

Correlation Coefficient

Impact Growth  Major Cineplex

Good diversification

The 3 months correlation between Impact and Major is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Impact Growth REIT and Major Cineplex Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Lifestyle and Impact Growth 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 Impact Growth REIT are associated (or correlated) with Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Lifestyle has no effect on the direction of Impact Growth i.e., Impact Growth and Major Cineplex go up and down completely randomly.

Pair Corralation between Impact Growth and Major Cineplex

Assuming the 90 days trading horizon Impact Growth REIT is expected to under-perform the Major Cineplex. But the stock apears to be less risky and, when comparing its historical volatility, Impact Growth REIT is 97.87 times less risky than Major Cineplex. The stock trades about -0.08 of its potential returns per unit of risk. The Major Cineplex Lifestyle is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Major Cineplex Lifestyle on September 3, 2024 and sell it today you would earn a total of  426.00  from holding Major Cineplex Lifestyle or generate 9.223372036854776E16% return on investment over 90 days.

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

Impact Growth REIT  vs.  Major Cineplex Lifestyle

Impact Growth REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Growth REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Impact Growth is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Major Cineplex Lifestyle

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Major Cineplex Lifestyle are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Major Cineplex disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Impact Growth and Major Cineplex

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

The idea behind Impact Growth REIT and Major Cineplex Lifestyle 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.