Correlation Between Major Cineplex and Home Product
Can any of the company-specific risk be diversified away by investing in both Major Cineplex and Home Product 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 Home Product 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 Home Product Center, you can compare the effects of market volatilities on Major Cineplex and Home Product 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 Home Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Cineplex and Home Product.
Diversification Opportunities for Major Cineplex and Home Product
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Major and Home is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Group and Home Product Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Product Center 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 Home Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Product Center has no effect on the direction of Major Cineplex i.e., Major Cineplex and Home Product go up and down completely randomly.
Pair Corralation between Major Cineplex and Home Product
Assuming the 90 days trading horizon Major Cineplex Group is expected to under-perform the Home Product. But the stock apears to be less risky and, when comparing its historical volatility, Major Cineplex Group is 1.07 times less risky than Home Product. The stock trades about -0.09 of its potential returns per unit of risk. The Home Product Center is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Home Product Center on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Home Product Center or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Cineplex Group vs. Home Product Center
Performance |
| Timeline |
| Major Cineplex Group |
| Home Product Center |
Major Cineplex and Home Product Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Cineplex and Home Product
The main advantage of trading using opposite Major Cineplex and Home Product positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Cineplex position performs unexpectedly, Home Product 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 Home Product will offset losses from the drop in Home Product's long position.| Major Cineplex vs. Home Product Center | Major Cineplex vs. Land and Houses | Major Cineplex vs. Minor International Public | Major Cineplex vs. Advanced Info Service |
| Home Product vs. SCB X Public | Home Product vs. Kasikornbank Public | Home Product vs. PTT Public | Home Product vs. Kasikornbank 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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