Correlation Between Italian Thai and Major Cineplex

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

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

Diversification Opportunities for Italian Thai and Major Cineplex

0.44

Correlation Coefficient

Italian Thai  Major Cineplex

Very weak diversification

The 3 months correlation between Italian and Major is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and Major Cineplex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Group and Italian Thai 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 Italian Thai Development Public 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 Group has no effect on the direction of Italian Thai i.e., Italian Thai and Major Cineplex go up and down completely randomly.

Pair Corralation between Italian Thai and Major Cineplex

Assuming the 90 days trading horizon Italian Thai Development Public is expected to under-perform the Major Cineplex. In addition to that, Italian Thai is 1.77 times more volatile than Major Cineplex Group. It trades about -0.22 of its total potential returns per unit of risk. Major Cineplex Group is currently generating about -0.09 per unit of volatility. If you would invest  1,570  in Major Cineplex Group on October 20, 2024 and sell it today you would lose (140.00) from holding Major Cineplex Group or give up 8.92% of portfolio value over 90 days.

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

Italian Thai Development Publi  vs.  Major Cineplex Group

Italian Thai Develop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Italian Thai Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Major Cineplex Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Major Cineplex Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Italian Thai and Major Cineplex

The main advantage of trading using opposite Italian Thai and Major Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Italian Thai 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 Italian Thai Development Public and Major Cineplex Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.