Correlation Between AMC Entertainment and Big Screen

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

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

Diversification Opportunities for AMC Entertainment and Big Screen

-0.18

Correlation Coefficient

AMC Entertainment  Big Screen

Good diversification

The 3 months correlation between AMC and Big is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Big Screen Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Screen Entertainment and AMC Entertainment 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 AMC Entertainment Holdings are associated (or correlated) with Big Screen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Screen Entertainment has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Big Screen go up and down completely randomly.

Pair Corralation between AMC Entertainment and Big Screen

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to under-perform the Big Screen. But the stock apears to be less risky and, when comparing its historical volatility, AMC Entertainment Holdings is 4.22 times less risky than Big Screen. The stock trades about -0.05 of its potential returns per unit of risk. The Big Screen Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Big Screen Entertainment on September 21, 2024 and sell it today you would lose (0.10) from holding Big Screen Entertainment or give up 4.76% of portfolio value over 90 days.

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

AMC Entertainment Holdings  vs.  Big Screen Entertainment

AMC Entertainment

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Big Screen Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Big Screen Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Big Screen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMC Entertainment and Big Screen

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

The idea behind AMC Entertainment Holdings and Big Screen Entertainment 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.