Correlation Between Major Cineplex and Beauty Community

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

Diversification Opportunities for Major Cineplex and Beauty Community

0.71

Correlation Coefficient

Major Cineplex  Beauty Community

Poor diversification

The 3 months correlation between Major and Beauty is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Group and Beauty Community Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Community 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 Beauty Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Community Public has no effect on the direction of Major Cineplex i.e., Major Cineplex and Beauty Community go up and down completely randomly.

Pair Corralation between Major Cineplex and Beauty Community

Assuming the 90 days trading horizon Major Cineplex Group is expected to under-perform the Beauty Community. But the stock apears to be less risky and, when comparing its historical volatility, Major Cineplex Group is 2.33 times less risky than Beauty Community. The stock trades about -0.26 of its potential returns per unit of risk. The Beauty Community Public is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Beauty Community Public on December 24, 2024 and sell it today you would lose (6.00) from holding Beauty Community Public or give up 19.35% of portfolio value over 90 days.

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

Major Cineplex Group  vs.  Beauty Community 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. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Beauty Community Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beauty Community Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Major Cineplex and Beauty Community

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

The idea behind Major Cineplex Group and Beauty Community 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.