Correlation Between Cinemark Holdings and Paramount Global

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

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

Diversification Opportunities for Cinemark Holdings and Paramount Global

0.59

Correlation Coefficient

Cinemark Holdings  Paramount Global

Very weak diversification

The 3 months correlation between Cinemark and Paramount is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class and Cinemark Holdings 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 Cinemark Holdings are associated (or correlated) with Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Cinemark Holdings i.e., Cinemark Holdings and Paramount Global go up and down completely randomly.

Pair Corralation between Cinemark Holdings and Paramount Global

Considering the 90-day investment horizon Cinemark Holdings is expected to generate 0.96 times more return on investment than Paramount Global. However, Cinemark Holdings is 1.05 times less risky than Paramount Global. It trades about 0.21 of its potential returns per unit of risk. Paramount Global Class is currently generating about 0.05 per unit of risk. If you would invest  2,725  in Cinemark Holdings on September 3, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Cinemark Holdings  vs.  Paramount Global Class

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.

Paramount Global Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Paramount Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cinemark Holdings and Paramount Global

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

The idea behind Cinemark Holdings and Paramount Global Class 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.