Correlation Between Major Cineplex and Food Moments

Can any of the company-specific risk be diversified away by investing in both Major Cineplex and Food Moments 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 Food Moments 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 Food Moments PCL, you can compare the effects of market volatilities on Major Cineplex and Food Moments 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 Food Moments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Cineplex and Food Moments.

Diversification Opportunities for Major Cineplex and Food Moments

-0.64

Correlation Coefficient

Major Cineplex  Food Moments

Excellent diversification

The 3 months correlation between Major and Food is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Group and Food Moments PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Moments PCL 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 Food Moments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Moments PCL has no effect on the direction of Major Cineplex i.e., Major Cineplex and Food Moments go up and down completely randomly.

Pair Corralation between Major Cineplex and Food Moments

Assuming the 90 days trading horizon Major Cineplex Group is expected to under-perform the Food Moments. But the stock apears to be less risky and, when comparing its historical volatility, Major Cineplex Group is 1.91 times less risky than Food Moments. The stock trades about -0.38 of its potential returns per unit of risk. The Food Moments PCL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  357.00  in Food Moments PCL on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Food Moments PCL or generate 6.44% return on investment over 90 days.

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

Major Cineplex Group  vs.  Food Moments PCL

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Food Moments PCL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Food Moments PCL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Food Moments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Major Cineplex and Food Moments

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

The idea behind Major Cineplex Group and Food Moments PCL 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.