Correlation Between Hollywood Bowl and Hua Hong

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

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

Diversification Opportunities for Hollywood Bowl and Hua Hong

-0.17

Correlation Coefficient

Hollywood Bowl  Hua Hong

Good diversification

The 3 months correlation between Hollywood and Hua is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and Hollywood Bowl 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 Hollywood Bowl Group are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Hua Hong go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Hua Hong

Assuming the 90 days horizon Hollywood Bowl Group is expected to under-perform the Hua Hong. But the stock apears to be less risky and, when comparing its historical volatility, Hollywood Bowl Group is 1.18 times less risky than Hua Hong. The stock trades about -0.29 of its potential returns per unit of risk. The Hua Hong Semiconductor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  248.00  in Hua Hong Semiconductor on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Hua Hong Semiconductor or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Hollywood Bowl Group  vs.  Hua Hong Semiconductor

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. Despite nearly stable basic indicators, Hollywood Bowl is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hua Hong Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hollywood Bowl and Hua Hong

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

The idea behind Hollywood Bowl Group and Hua Hong Semiconductor 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.