Correlation Between News Corp and Cinemark Holdings

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

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

Diversification Opportunities for News Corp and Cinemark Holdings

0.91

Correlation Coefficient

News Corp  Cinemark Holdings

Almost no diversification

The 3 months correlation between News and Cinemark is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and News Corp 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 News Corp B 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 News Corp i.e., News Corp and Cinemark Holdings go up and down completely randomly.

Pair Corralation between News Corp and Cinemark Holdings

Considering the 90-day investment horizon News Corp is expected to generate 1.71 times less return on investment than Cinemark Holdings. But when comparing it to its historical volatility, News Corp B is 1.6 times less risky than Cinemark Holdings. It trades about 0.2 of its potential returns per unit of risk. Cinemark Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,725  in Cinemark Holdings on September 2, 2024 and sell it today you would earn a total of  727.00  from holding Cinemark Holdings or generate 26.68% return on investment over 90 days.

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

News Corp B  vs.  Cinemark Holdings

News Corp B

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, News Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cinemark Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Cinemark Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with News Corp and Cinemark Holdings

The main advantage of trading using opposite News Corp and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp 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 News Corp B 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.