Correlation Between Major Cineplex and VGI Public

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

Diversification Opportunities for Major Cineplex and VGI Public

0.34

Correlation Coefficient

Major Cineplex  VGI Public

Weak diversification

The 3 months correlation between Major and VGI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Group and VGI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VGI 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 VGI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VGI Public has no effect on the direction of Major Cineplex i.e., Major Cineplex and VGI Public go up and down completely randomly.

Pair Corralation between Major Cineplex and VGI Public

Assuming the 90 days trading horizon Major Cineplex Group is expected to under-perform the VGI Public. But the stock apears to be less risky and, when comparing its historical volatility, Major Cineplex Group is 2.33 times less risky than VGI Public. The stock trades about -0.26 of its potential returns per unit of risk. The VGI Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  320.00  in VGI Public on December 21, 2024 and sell it today you would lose (4.00) from holding VGI Public or give up 1.25% of portfolio value over 90 days.

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

Major Cineplex Group  vs.  VGI 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.

VGI Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VGI Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, VGI Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Major Cineplex and VGI Public

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

The idea behind Major Cineplex Group and VGI 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.