Correlation Between AMC Entertainment and Reading International
Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Reading International 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 Reading International 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 Reading International, you can compare the effects of market volatilities on AMC Entertainment and Reading International 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 Reading International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Reading International.
Diversification Opportunities for AMC Entertainment and Reading International
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMC and Reading is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Reading International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reading International 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 Reading International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reading International has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Reading International go up and down completely randomly.
Pair Corralation between AMC Entertainment and Reading International
Considering the 90-day investment horizon AMC Entertainment Holdings is expected to generate 0.76 times more return on investment than Reading International. However, AMC Entertainment Holdings is 1.31 times less risky than Reading International. It trades about 0.12 of its potential returns per unit of risk. Reading International is currently generating about 0.03 per unit of risk. If you would invest 444.00 in AMC Entertainment Holdings on August 30, 2024 and sell it today you would earn a total of 36.00 from holding AMC Entertainment Holdings or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMC Entertainment Holdings vs. Reading International
Performance |
| Timeline |
| AMC Entertainment |
| Reading International |
AMC Entertainment and Reading International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMC Entertainment and Reading International
The main advantage of trading using opposite AMC Entertainment and Reading International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, Reading International 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 Reading International will offset losses from the drop in Reading International's long position.| AMC Entertainment vs. Cinemark Holdings | AMC Entertainment vs. Roku Inc | AMC Entertainment vs. Netflix | AMC Entertainment vs. Paramount Global Class |
| Reading International vs. Reservoir Media | Reading International vs. Marcus | Reading International vs. Gaia Inc | Reading International vs. News Corp B |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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