Correlation Between Cinemark Holdings and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Cinemark Holdings and Liberty Media 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 Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cinemark Holdings and Liberty Media, you can compare the effects of market volatilities on Cinemark Holdings and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinemark Holdings and Liberty Media.
Diversification Opportunities for Cinemark Holdings and Liberty Media
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cinemark and Liberty is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of Cinemark Holdings i.e., Cinemark Holdings and Liberty Media go up and down completely randomly.
Pair Corralation between Cinemark Holdings and Liberty Media
Considering the 90-day investment horizon Cinemark Holdings is expected to generate 1.42 times more return on investment than Liberty Media. However, Cinemark Holdings is 1.42 times more volatile than Liberty Media. It trades about 0.17 of its potential returns per unit of risk. Liberty Media is currently generating about 0.09 per unit of risk. If you would invest 1,425 in Cinemark Holdings on August 26, 2024 and sell it today you would earn a total of 1,838 from holding Cinemark Holdings or generate 128.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cinemark Holdings vs. Liberty Media
Performance |
| Timeline |
| Cinemark Holdings |
| Liberty Media |
Cinemark Holdings and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cinemark Holdings and Liberty Media
The main advantage of trading using opposite Cinemark Holdings and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cinemark Holdings position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| Cinemark Holdings vs. News Corp B | Cinemark Holdings vs. Marcus | Cinemark Holdings vs. Liberty Media | Cinemark Holdings vs. Warner Music Group |
| Liberty Media vs. ADTRAN Inc | Liberty Media vs. Belden Inc | Liberty Media vs. ADC Therapeutics SA | Liberty Media vs. Comtech Telecommunications Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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