Correlation Between Major Cineplex and BEC World
Can any of the company-specific risk be diversified away by investing in both Major Cineplex and BEC World 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 Major Cineplex and BEC World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Cineplex Group and BEC World Public, you can compare the effects of market volatilities on Major Cineplex and BEC World 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 Major Cineplex with a short position of BEC World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Cineplex and BEC World.
Diversification Opportunities for Major Cineplex and BEC World
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Major and BEC is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Group and BEC World Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEC World Public and Major Cineplex 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 Major Cineplex Group are associated (or correlated) with BEC World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEC World Public has no effect on the direction of Major Cineplex i.e., Major Cineplex and BEC World go up and down completely randomly.
Pair Corralation between Major Cineplex and BEC World
Assuming the 90 days trading horizon Major Cineplex is expected to generate 105.69 times less return on investment than BEC World. But when comparing it to its historical volatility, Major Cineplex Group is 32.4 times less risky than BEC World. It trades about 0.01 of its potential returns per unit of risk. BEC World Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 782.00 in BEC World Public on August 28, 2024 and sell it today you would lose (390.00) from holding BEC World Public or give up 49.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Major Cineplex Group vs. BEC World Public
Performance |
| Timeline |
| Major Cineplex Group |
| BEC World Public |
Major Cineplex and BEC World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Cineplex and BEC World
The main advantage of trading using opposite Major Cineplex and BEC World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Cineplex position performs unexpectedly, BEC World 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 BEC World will offset losses from the drop in BEC World's long position.| Major Cineplex vs. Indara Insurance Public | Major Cineplex vs. Regional Container Lines | Major Cineplex vs. Regional Container Lines | Major Cineplex vs. Mahachai Hospital Public |
| BEC World vs. Indara Insurance Public | BEC World vs. Regional Container Lines | BEC World vs. Regional Container Lines | BEC World vs. Mahachai Hospital Public |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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