Correlation Between Dolphin Entertainment and Cinemark Holdings

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

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

Diversification Opportunities for Dolphin Entertainment and Cinemark Holdings

-0.69

Correlation Coefficient

Dolphin Entertainment  Cinemark Holdings

Excellent diversification

The 3 months correlation between Dolphin and Cinemark is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Dolphin 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 Dolphin Entertainment 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 Dolphin Entertainment i.e., Dolphin Entertainment and Cinemark Holdings go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and Cinemark Holdings

Given the investment horizon of 90 days Dolphin Entertainment is expected to under-perform the Cinemark Holdings. In addition to that, Dolphin Entertainment is 1.87 times more volatile than Cinemark Holdings. It trades about -0.16 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about -0.1 per unit of volatility. If you would invest  1,846  in Cinemark Holdings on January 30, 2024 and sell it today you would lose (81.00) from holding Cinemark Holdings or give up 4.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Dolphin Entertainment  vs.  Cinemark Holdings

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Cinemark Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Cinemark Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Entertainment and Cinemark Holdings

The main advantage of trading using opposite Dolphin Entertainment and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Entertainment 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.

The idea behind Dolphin Entertainment and Cinemark 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.