Correlation Between ADTRAN and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both ADTRAN and Cinemark Holdings 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 ADTRAN and Cinemark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Cinemark Holdings, you can compare the effects of market volatilities on ADTRAN and Cinemark Holdings 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 ADTRAN with a short position of Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Cinemark Holdings.
Diversification Opportunities for ADTRAN and Cinemark Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ADTRAN and Cinemark is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and ADTRAN 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 ADTRAN Inc are associated (or correlated) with Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of ADTRAN i.e., ADTRAN and Cinemark Holdings go up and down completely randomly.
Pair Corralation between ADTRAN and Cinemark Holdings
Given the investment horizon of 90 days ADTRAN is expected to generate 3.86 times less return on investment than Cinemark Holdings. In addition to that, ADTRAN is 1.7 times more volatile than Cinemark Holdings. It trades about 0.01 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about 0.09 per unit of volatility. If you would invest 1,836 in Cinemark Holdings on August 31, 2024 and sell it today you would earn a total of 1,616 from holding Cinemark Holdings or generate 88.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADTRAN Inc vs. Cinemark Holdings
Performance |
| Timeline |
| ADTRAN Inc |
| Cinemark Holdings |
ADTRAN and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Cinemark Holdings
The main advantage of trading using opposite ADTRAN and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, Cinemark Holdings 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 Cinemark Holdings will offset losses from the drop in Cinemark Holdings' long position.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| Cinemark Holdings vs. Roku Inc | Cinemark Holdings vs. AMC Entertainment Holdings | Cinemark Holdings vs. Paramount Global Class | Cinemark Holdings vs. Warner Bros Discovery |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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