Correlation Between Direct Digital and AMC Entertainment

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

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

Diversification Opportunities for Direct Digital and AMC Entertainment

-0.11

Correlation Coefficient

Direct Digital  AMC Entertainment

Good diversification

The 3 months correlation between Direct and AMC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with AMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Entertainment has no effect on the direction of Direct Digital i.e., Direct Digital and AMC Entertainment go up and down completely randomly.

Pair Corralation between Direct Digital and AMC Entertainment

Given the investment horizon of 90 days Direct Digital Holdings is expected to under-perform the AMC Entertainment. In addition to that, Direct Digital is 1.12 times more volatile than AMC Entertainment Holdings. It trades about -0.03 of its total potential returns per unit of risk. AMC Entertainment Holdings is currently generating about 0.02 per unit of volatility. If you would invest  301.00  in AMC Entertainment Holdings on May 20, 2025 and sell it today you would lose (2.00) from holding AMC Entertainment Holdings or give up 0.66% of portfolio value over 90 days.

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

Direct Digital Holdings  vs.  AMC Entertainment Holdings

Direct Digital Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days Direct Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AMC Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMC Entertainment Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, AMC Entertainment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Direct Digital and AMC Entertainment

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

The idea behind Direct Digital Holdings and AMC Entertainment 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.