Correlation Between INDOFOOD AGRI and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Cinemark Holdings 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 INDOFOOD AGRI and Cinemark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDOFOOD AGRI RES and Cinemark Holdings, you can compare the effects of market volatilities on INDOFOOD AGRI and Cinemark Holdings 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 INDOFOOD AGRI with a short position of Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Cinemark Holdings.
Diversification Opportunities for INDOFOOD AGRI and Cinemark Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDOFOOD and Cinemark is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and INDOFOOD AGRI 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 INDOFOOD AGRI RES are associated (or correlated) with Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Cinemark Holdings go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Cinemark Holdings
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 3.3 times less return on investment than Cinemark Holdings. In addition to that, INDOFOOD AGRI is 1.18 times more volatile than Cinemark Holdings. It trades about 0.11 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about 0.41 per unit of volatility. If you would invest 2,724 in Cinemark Holdings on September 2, 2024 and sell it today you would earn a total of 494.00 from holding Cinemark Holdings or generate 18.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Cinemark Holdings
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Cinemark Holdings |
INDOFOOD AGRI and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Cinemark Holdings
The main advantage of trading using opposite INDOFOOD AGRI and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Cinemark Holdings 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 Cinemark Holdings will offset losses from the drop in Cinemark Holdings' long position.| INDOFOOD AGRI vs. SIVERS SEMICONDUCTORS AB | INDOFOOD AGRI vs. Darden Restaurants | INDOFOOD AGRI vs. Reliance Steel Aluminum | INDOFOOD AGRI vs. Q2M Managementberatung AG |
| Cinemark Holdings vs. Lifeway Foods | Cinemark Holdings vs. National Beverage Corp | Cinemark Holdings vs. Tyson Foods | Cinemark Holdings vs. INDOFOOD AGRI RES |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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