Correlation Between AMC Entertainment and Sinclair Broadcast

Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Sinclair Broadcast 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 AMC Entertainment and Sinclair Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMC Entertainment Holdings and Sinclair Broadcast Group, you can compare the effects of market volatilities on AMC Entertainment and Sinclair Broadcast 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 AMC Entertainment with a short position of Sinclair Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Sinclair Broadcast.

Diversification Opportunities for AMC Entertainment and Sinclair Broadcast

0.61

Correlation Coefficient

AMC Entertainment  Sinclair Broadcast

Poor diversification

The 3 months correlation between AMC and Sinclair is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Sinclair Broadcast Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinclair Broadcast and AMC Entertainment 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 AMC Entertainment Holdings are associated (or correlated) with Sinclair Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinclair Broadcast has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Sinclair Broadcast go up and down completely randomly.

Pair Corralation between AMC Entertainment and Sinclair Broadcast

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to generate 2.18 times more return on investment than Sinclair Broadcast. However, AMC Entertainment is 2.18 times more volatile than Sinclair Broadcast Group. It trades about 0.09 of its potential returns per unit of risk. Sinclair Broadcast Group is currently generating about 0.13 per unit of risk. If you would invest  295.00  in AMC Entertainment Holdings on February 8, 2024 and sell it today you would earn a total of  24.00  from holding AMC Entertainment Holdings or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AMC Entertainment Holdings  vs.  Sinclair Broadcast Group

AMC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMC Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sinclair Broadcast

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinclair Broadcast Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Sinclair Broadcast is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AMC Entertainment and Sinclair Broadcast

The main advantage of trading using opposite AMC Entertainment and Sinclair Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, Sinclair Broadcast 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 Sinclair Broadcast will offset losses from the drop in Sinclair Broadcast's long position.

The idea behind AMC Entertainment Holdings and Sinclair Broadcast 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.