Correlation Between Major Cineplex and Autocorp Holding

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

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

Diversification Opportunities for Major Cineplex and Autocorp Holding

0.56

Correlation Coefficient

Major Cineplex  Autocorp Holding

Very weak diversification

The 3 months correlation between Major and Autocorp is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Group and Autocorp Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocorp Holding Public and Major Cineplex 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 Major Cineplex Group are associated (or correlated) with Autocorp Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocorp Holding Public has no effect on the direction of Major Cineplex i.e., Major Cineplex and Autocorp Holding go up and down completely randomly.

Pair Corralation between Major Cineplex and Autocorp Holding

Assuming the 90 days trading horizon Major Cineplex Group is expected to generate 0.46 times more return on investment than Autocorp Holding. However, Major Cineplex Group is 2.18 times less risky than Autocorp Holding. It trades about -0.12 of its potential returns per unit of risk. Autocorp Holding Public is currently generating about -0.06 per unit of risk. If you would invest  1,409  in Major Cineplex Group on November 29, 2024 and sell it today you would lose (109.00) from holding Major Cineplex Group or give up 7.74% of portfolio value over 90 days.

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

Major Cineplex Group  vs.  Autocorp Holding Public

Major Cineplex Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Major Cineplex Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Autocorp Holding Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autocorp Holding Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Major Cineplex and Autocorp Holding

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

The idea behind Major Cineplex Group and Autocorp Holding Public 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.