Correlation Between Odfjell Drilling and Hollywood Bowl

Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling and Hollywood Bowl 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 Odfjell Drilling and Hollywood Bowl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Odfjell Drilling and Hollywood Bowl Group, you can compare the effects of market volatilities on Odfjell Drilling and Hollywood Bowl 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 Odfjell Drilling with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Hollywood Bowl.

Diversification Opportunities for Odfjell Drilling and Hollywood Bowl

-0.29

Correlation Coefficient

Odfjell Drilling  Hollywood Bowl

Very good diversification

The 3 months correlation between Odfjell and Hollywood is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group and Odfjell Drilling 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 Odfjell Drilling are associated (or correlated) with Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Hollywood Bowl go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Hollywood Bowl

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 1.26 times more return on investment than Hollywood Bowl. However, Odfjell Drilling is 1.26 times more volatile than Hollywood Bowl Group. It trades about 0.08 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.02 per unit of risk. If you would invest  2,596  in Odfjell Drilling on October 11, 2024 and sell it today you would earn a total of  3,084  from holding Odfjell Drilling or generate 118.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Odfjell Drilling  vs.  Hollywood Bowl Group

Odfjell Drilling

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Odfjell Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hollywood Bowl Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Odfjell Drilling and Hollywood Bowl

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

The idea behind Odfjell Drilling and Hollywood Bowl 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.