Correlation Between Hollywood Bowl and Fuji Media

Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl and Fuji Media 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 Fuji Media 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 Fuji Media Holdings, you can compare the effects of market volatilities on Hollywood Bowl and Fuji Media 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 Fuji Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and Fuji Media.

Diversification Opportunities for Hollywood Bowl and Fuji Media

-0.12

Correlation Coefficient

Hollywood Bowl  Fuji Media

Good diversification

The 3 months correlation between Hollywood and Fuji is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Fuji Media go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Fuji Media

Assuming the 90 days horizon Hollywood Bowl is expected to generate 1.28 times less return on investment than Fuji Media. In addition to that, Hollywood Bowl is 1.03 times more volatile than Fuji Media Holdings. It trades about 0.04 of its total potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.05 per unit of volatility. If you would invest  725.00  in Fuji Media Holdings on October 4, 2024 and sell it today you would earn a total of  315.00  from holding Fuji Media Holdings or generate 43.45% return on investment over 90 days.

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

Hollywood Bowl Group  vs.  Fuji Media Holdings

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 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.

Fuji Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuji Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fuji Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hollywood Bowl and Fuji Media

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

The idea behind Hollywood Bowl Group and Fuji Media 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.