Correlation Between Sinclair Broadcast and AMC Entertainment

Can any of the company-specific risk be diversified away by investing in both Sinclair Broadcast and AMC Entertainment 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 Sinclair Broadcast and AMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinclair Broadcast Group and AMC Entertainment Holdings, you can compare the effects of market volatilities on Sinclair Broadcast and AMC Entertainment 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 Sinclair Broadcast with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinclair Broadcast and AMC Entertainment.

Diversification Opportunities for Sinclair Broadcast and AMC Entertainment

0.39

Correlation Coefficient

Sinclair Broadcast  AMC Entertainment

Weak diversification

The 3 months correlation between Sinclair and AMC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sinclair Broadcast Group and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and Sinclair Broadcast 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 Sinclair Broadcast Group are associated (or correlated) with AMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Entertainment has no effect on the direction of Sinclair Broadcast i.e., Sinclair Broadcast and AMC Entertainment go up and down completely randomly.

Pair Corralation between Sinclair Broadcast and AMC Entertainment

Given the investment horizon of 90 days Sinclair Broadcast Group is expected to generate 0.92 times more return on investment than AMC Entertainment. However, Sinclair Broadcast Group is 1.08 times less risky than AMC Entertainment. It trades about 0.03 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.15 per unit of risk. If you would invest  1,536  in Sinclair Broadcast Group on December 28, 2024 and sell it today you would earn a total of  31.00  from holding Sinclair Broadcast Group or generate 2.02% return on investment over 90 days.

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

Sinclair Broadcast Group  vs.  AMC Entertainment Holdings

Sinclair Broadcast

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinclair Broadcast Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Sinclair Broadcast is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

AMC Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sinclair Broadcast and AMC Entertainment

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

The idea behind Sinclair Broadcast Group and AMC Entertainment 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.