Correlation Between Regional Container and Major Cineplex
Can any of the company-specific risk be diversified away by investing in both Regional Container and Major Cineplex 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 Regional Container and Major Cineplex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Container Lines and Major Cineplex Group, you can compare the effects of market volatilities on Regional Container and Major Cineplex 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 Regional Container with a short position of Major Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and Major Cineplex.
Diversification Opportunities for Regional Container and Major Cineplex
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Regional and Major is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Major Cineplex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Group and Regional Container 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 Regional Container Lines are associated (or correlated) with Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Group has no effect on the direction of Regional Container i.e., Regional Container and Major Cineplex go up and down completely randomly.
Pair Corralation between Regional Container and Major Cineplex
Assuming the 90 days trading horizon Regional Container Lines is expected to generate 1.61 times more return on investment than Major Cineplex. However, Regional Container is 1.61 times more volatile than Major Cineplex Group. It trades about 0.15 of its potential returns per unit of risk. Major Cineplex Group is currently generating about -0.07 per unit of risk. If you would invest 2,408 in Regional Container Lines on August 27, 2024 and sell it today you would earn a total of 192.00 from holding Regional Container Lines or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. Major Cineplex Group
Performance |
| Timeline |
| Regional Container Lines |
| Major Cineplex Group |
Regional Container and Major Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and Major Cineplex
The main advantage of trading using opposite Regional Container and Major Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, Major Cineplex 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 Major Cineplex will offset losses from the drop in Major Cineplex's long position.The idea behind Regional Container Lines and Major Cineplex Group 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.| Major Cineplex vs. Indara Insurance Public | Major Cineplex vs. Regional Container Lines | Major Cineplex vs. Regional Container Lines | Major Cineplex 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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