Correlation Between Paramount Global and Cinemark Holdings

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

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

Diversification Opportunities for Paramount Global and Cinemark Holdings

-0.08

Correlation Coefficient

Paramount Global  Cinemark Holdings

Good diversification

The 3 months correlation between Paramount and Cinemark is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Paramount Global 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 Paramount Global Class 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 Paramount Global i.e., Paramount Global and Cinemark Holdings go up and down completely randomly.

Pair Corralation between Paramount Global and Cinemark Holdings

Given the investment horizon of 90 days Paramount Global Class is expected to generate 0.7 times more return on investment than Cinemark Holdings. However, Paramount Global Class is 1.43 times less risky than Cinemark Holdings. It trades about 0.07 of its potential returns per unit of risk. Cinemark Holdings is currently generating about -0.18 per unit of risk. If you would invest  1,080  in Paramount Global Class on November 29, 2024 and sell it today you would earn a total of  70.00  from holding Paramount Global Class or generate 6.48% return on investment over 90 days.

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

Paramount Global Class  vs.  Cinemark Holdings

Paramount Global Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paramount Global may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Cinemark Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cinemark Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Paramount Global and Cinemark Holdings

The main advantage of trading using opposite Paramount Global and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global 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 Paramount Global Class 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.