Correlation Between Cinemark Holdings and Dolby Laboratories
Can any of the company-specific risk be diversified away by investing in both Cinemark Holdings and Dolby Laboratories 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 Cinemark Holdings and Dolby Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cinemark Holdings and Dolby Laboratories, you can compare the effects of market volatilities on Cinemark Holdings and Dolby Laboratories 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 Cinemark Holdings with a short position of Dolby Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinemark Holdings and Dolby Laboratories.
Diversification Opportunities for Cinemark Holdings and Dolby Laboratories
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cinemark and Dolby is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and Dolby Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolby Laboratories and Cinemark Holdings 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 Cinemark Holdings are associated (or correlated) with Dolby Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolby Laboratories has no effect on the direction of Cinemark Holdings i.e., Cinemark Holdings and Dolby Laboratories go up and down completely randomly.
Pair Corralation between Cinemark Holdings and Dolby Laboratories
Assuming the 90 days horizon Cinemark Holdings is expected to generate 1.02 times more return on investment than Dolby Laboratories. However, Cinemark Holdings is 1.02 times more volatile than Dolby Laboratories. It trades about 0.31 of its potential returns per unit of risk. Dolby Laboratories is currently generating about 0.01 per unit of risk. If you would invest 1,524 in Cinemark Holdings on September 3, 2024 and sell it today you would earn a total of 1,694 from holding Cinemark Holdings or generate 111.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cinemark Holdings vs. Dolby Laboratories
Performance |
| Timeline |
| Cinemark Holdings |
| Dolby Laboratories |
Cinemark Holdings and Dolby Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cinemark Holdings and Dolby Laboratories
The main advantage of trading using opposite Cinemark Holdings and Dolby Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cinemark Holdings position performs unexpectedly, Dolby Laboratories 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 Dolby Laboratories will offset losses from the drop in Dolby Laboratories' long position.| Cinemark Holdings vs. Live Nation Entertainment | Cinemark Holdings vs. Dolby Laboratories | Cinemark Holdings vs. CTS Eventim AG | Cinemark Holdings vs. Toho Co |
| Dolby Laboratories vs. MARKET VECTR RETAIL | Dolby Laboratories vs. DATANG INTL POW | Dolby Laboratories vs. Science Applications International | Dolby Laboratories vs. PICKN PAY STORES |
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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