Correlation Between Major Cineplex and Land

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

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

Diversification Opportunities for Major Cineplex and Land

0.97

Correlation Coefficient

Major Cineplex  Land

Almost no diversification

The 3 months correlation between Major and Land is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Lifestyle and Land and Houses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land and Houses and Major Cineplex 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 Major Cineplex Lifestyle are associated (or correlated) with Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land and Houses has no effect on the direction of Major Cineplex i.e., Major Cineplex and Land go up and down completely randomly.

Pair Corralation between Major Cineplex and Land

Assuming the 90 days trading horizon Major Cineplex Lifestyle is expected to generate 0.05 times more return on investment than Land. However, Major Cineplex Lifestyle is 18.77 times less risky than Land. It trades about -0.05 of its potential returns per unit of risk. Land and Houses is currently generating about -0.22 per unit of risk. If you would invest  418.00  in Major Cineplex Lifestyle on September 5, 2024 and sell it today you would lose (6.00) from holding Major Cineplex Lifestyle or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Major Cineplex Lifestyle  vs.  Land and Houses

Major Cineplex Lifestyle

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Major Cineplex Lifestyle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Major Cineplex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Major Cineplex and Land

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

The idea behind Major Cineplex Lifestyle and Land and Houses 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.