Correlation Between Liberty Media and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both Liberty Media 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 Liberty Media and Cinemark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Cinemark Holdings, you can compare the effects of market volatilities on Liberty Media 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 Liberty Media with a short position of Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Cinemark Holdings.
Diversification Opportunities for Liberty Media and Cinemark Holdings
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Liberty and Cinemark is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Liberty Media 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 Liberty Media 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 Liberty Media i.e., Liberty Media and Cinemark Holdings go up and down completely randomly.
Pair Corralation between Liberty Media and Cinemark Holdings
Assuming the 90 days horizon Liberty Media is expected to generate 2.03 times less return on investment than Cinemark Holdings. But when comparing it to its historical volatility, Liberty Media is 1.36 times less risky than Cinemark Holdings. It trades about 0.06 of its potential returns per unit of risk. Cinemark Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,286 in Cinemark Holdings on November 1, 2024 and sell it today you would earn a total of 1,599 from holding Cinemark Holdings or generate 124.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media vs. Cinemark Holdings
Performance |
| Timeline |
| Liberty Media |
| Cinemark Holdings |
Liberty Media and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Cinemark Holdings
The main advantage of trading using opposite Liberty Media and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media 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.| Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. Madison Square Garden | Liberty Media vs. News Corp B | Liberty Media vs. News Corp A |
| Cinemark Holdings vs. News Corp B | Cinemark Holdings vs. Marcus | Cinemark Holdings vs. Liberty Media | Cinemark Holdings vs. Warner Music Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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