Correlation Between Quality Houses and Major Cineplex

Can any of the company-specific risk be diversified away by investing in both Quality Houses and Major Cineplex 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 Quality Houses and Major Cineplex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quality Houses Property and Major Cineplex Lifestyle, you can compare the effects of market volatilities on Quality Houses and Major Cineplex 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 Quality Houses with a short position of Major Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quality Houses and Major Cineplex.

Diversification Opportunities for Quality Houses and Major Cineplex

-0.37

Correlation Coefficient

Quality Houses  Major Cineplex

Very good diversification

The 3 months correlation between Quality and Major is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Property and Major Cineplex Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Lifestyle and Quality Houses 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 Quality Houses Property are associated (or correlated) with Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Lifestyle has no effect on the direction of Quality Houses i.e., Quality Houses and Major Cineplex go up and down completely randomly.

Pair Corralation between Quality Houses and Major Cineplex

Assuming the 90 days trading horizon Quality Houses Property is expected to under-perform the Major Cineplex. In addition to that, Quality Houses is 23.7 times more volatile than Major Cineplex Lifestyle. It trades about -0.15 of its total potential returns per unit of risk. Major Cineplex Lifestyle is currently generating about 0.09 per unit of volatility. If you would invest  416.00  in Major Cineplex Lifestyle on December 1, 2024 and sell it today you would earn a total of  12.00  from holding Major Cineplex Lifestyle or generate 2.88% return on investment over 90 days.

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

Quality Houses Property  vs.  Major Cineplex Lifestyle

Quality Houses Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Houses Property has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the fund institutional investors.

Major Cineplex Lifestyle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Major Cineplex Lifestyle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Major Cineplex 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 Quality Houses and Major Cineplex

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

The idea behind Quality Houses Property and Major Cineplex Lifestyle 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.