Correlation Between Aeye and Cinemark Holdings

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

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

Diversification Opportunities for Aeye and Cinemark Holdings

0.21

Correlation Coefficient

Aeye  Cinemark Holdings

Modest diversification

The 3 months correlation between Aeye and Cinemark is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Aeye 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 Aeye Inc 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 Aeye i.e., Aeye and Cinemark Holdings go up and down completely randomly.

Pair Corralation between Aeye and Cinemark Holdings

Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Cinemark Holdings. In addition to that, Aeye is 4.06 times more volatile than Cinemark Holdings. It trades about -0.2 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about -0.17 per unit of volatility. If you would invest  3,097  in Cinemark Holdings on December 2, 2024 and sell it today you would lose (536.00) from holding Cinemark Holdings or give up 17.31% of portfolio value over 90 days.

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

Aeye Inc  vs.  Cinemark Holdings

Aeye Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeye Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Aeye is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Cinemark Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aeye and Cinemark Holdings

The main advantage of trading using opposite Aeye and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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 Aeye Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.