Correlation Between Comtech Telecommunicatio and Cinemark Holdings

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

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

Diversification Opportunities for Comtech Telecommunicatio and Cinemark Holdings

-0.58

Correlation Coefficient

Comtech Telecommunicatio  Cinemark Holdings

Excellent diversification

The 3 months correlation between Comtech and Cinemark is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Comtech Telecommunicatio 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 Comtech Telecommunications Corp 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 Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Cinemark Holdings go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Cinemark Holdings

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the Cinemark Holdings. In addition to that, Comtech Telecommunicatio is 2.64 times more volatile than Cinemark Holdings. It trades about -0.01 of its total potential returns per unit of risk. Cinemark Holdings is currently generating about 0.09 per unit of volatility. If you would invest  1,324  in Cinemark Holdings on August 26, 2024 and sell it today you would earn a total of  1,939  from holding Cinemark Holdings or generate 146.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Comtech Telecommunications Cor  vs.  Cinemark Holdings

Comtech Telecommunicatio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cinemark Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cinemark Holdings are ranked lower than 10 (%) 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 Comtech Telecommunicatio and Cinemark Holdings

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

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.