Correlation Between Cinemark Holdings and Endeavor Group

Can any of the company-specific risk be diversified away by investing in both Cinemark Holdings and Endeavor Group 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 Endeavor Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cinemark Holdings and Endeavor Group Holdings, you can compare the effects of market volatilities on Cinemark Holdings and Endeavor Group 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 Endeavor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinemark Holdings and Endeavor Group.

Diversification Opportunities for Cinemark Holdings and Endeavor Group

0.6

Correlation Coefficient

Cinemark Holdings  Endeavor Group

Poor diversification

The 3 months correlation between Cinemark and Endeavor is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and Endeavor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavor Group Holdings 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 Endeavor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavor Group Holdings has no effect on the direction of Cinemark Holdings i.e., Cinemark Holdings and Endeavor Group go up and down completely randomly.

Pair Corralation between Cinemark Holdings and Endeavor Group

Considering the 90-day investment horizon Cinemark Holdings is expected to generate 1.84 times less return on investment than Endeavor Group. In addition to that, Cinemark Holdings is 1.16 times more volatile than Endeavor Group Holdings. It trades about 0.02 of its total potential returns per unit of risk. Endeavor Group Holdings is currently generating about 0.04 per unit of volatility. If you would invest  1,935  in Endeavor Group Holdings on February 6, 2024 and sell it today you would earn a total of  715.50  from holding Endeavor Group Holdings or generate 36.98% 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.  Endeavor Group Holdings

Cinemark Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Cinemark Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Endeavor Group Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavor Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Endeavor Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Cinemark Holdings and Endeavor Group

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

The idea behind Cinemark Holdings and Endeavor Group Holdings 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.