Correlation Between Gaia and AMC Entertainment
Can any of the company-specific risk be diversified away by investing in both Gaia and AMC Entertainment 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 Gaia and AMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaia Inc and AMC Entertainment Holdings, you can compare the effects of market volatilities on Gaia and AMC Entertainment 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 Gaia with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaia and AMC Entertainment.
Diversification Opportunities for Gaia and AMC Entertainment
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gaia and AMC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gaia Inc and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and Gaia 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 Gaia Inc are associated (or correlated) with AMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Entertainment has no effect on the direction of Gaia i.e., Gaia and AMC Entertainment go up and down completely randomly.
Pair Corralation between Gaia and AMC Entertainment
Given the investment horizon of 90 days Gaia Inc is expected to generate 0.83 times more return on investment than AMC Entertainment. However, Gaia Inc is 1.21 times less risky than AMC Entertainment. It trades about 0.1 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about 0.02 per unit of risk. If you would invest 448.00 in Gaia Inc on August 30, 2024 and sell it today you would earn a total of 161.00 from holding Gaia Inc or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaia Inc vs. AMC Entertainment Holdings
Performance |
| Timeline |
| Gaia Inc |
| AMC Entertainment |
Gaia and AMC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaia and AMC Entertainment
The main advantage of trading using opposite Gaia and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaia position performs unexpectedly, AMC Entertainment 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 AMC Entertainment will offset losses from the drop in AMC Entertainment's long position.The idea behind Gaia Inc and AMC Entertainment Holdings 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.| AMC Entertainment vs. Cinemark Holdings | AMC Entertainment vs. Roku Inc | AMC Entertainment vs. Netflix | AMC Entertainment vs. Paramount Global Class |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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