Correlation Between Major Cineplex and Quality Houses
Can any of the company-specific risk be diversified away by investing in both Major Cineplex and Quality Houses 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 Quality Houses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Cineplex Lifestyle and Quality Houses Hotel, you can compare the effects of market volatilities on Major Cineplex and Quality Houses 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 Quality Houses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Cineplex and Quality Houses.
Diversification Opportunities for Major Cineplex and Quality Houses
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Major and Quality is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Major Cineplex Lifestyle and Quality Houses Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Hotel 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 Lifestyle are associated (or correlated) with Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Hotel has no effect on the direction of Major Cineplex i.e., Major Cineplex and Quality Houses go up and down completely randomly.
Pair Corralation between Major Cineplex and Quality Houses
Assuming the 90 days trading horizon Major Cineplex Lifestyle is expected to generate 0.99 times more return on investment than Quality Houses. However, Major Cineplex Lifestyle is 1.01 times less risky than Quality Houses. It trades about 0.04 of its potential returns per unit of risk. Quality Houses Hotel is currently generating about 0.04 per unit of risk. If you would invest 585.00 in Major Cineplex Lifestyle on September 2, 2024 and sell it today you would lose (159.00) from holding Major Cineplex Lifestyle or give up 27.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Major Cineplex Lifestyle vs. Quality Houses Hotel
Performance |
| Timeline |
| Major Cineplex Lifestyle |
| Quality Houses Hotel |
Major Cineplex and Quality Houses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Cineplex and Quality Houses
The main advantage of trading using opposite Major Cineplex and Quality Houses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Cineplex position performs unexpectedly, Quality Houses 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 Quality Houses will offset losses from the drop in Quality Houses' long position.| Major Cineplex vs. LH Shopping Centers | Major Cineplex vs. Land and Houses | Major Cineplex vs. Quality Houses Property | Major Cineplex vs. Impact Growth REIT |
| Quality Houses vs. Quality Houses Property | Quality Houses vs. Land and Houses | Quality Houses vs. WHA Premium Growth | Quality Houses vs. LH Hotel Leasehold |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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