Correlation Between Hollywood Bowl and Rmy Cointreau

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

Diversification Opportunities for Hollywood Bowl and Rmy Cointreau

-0.41

Correlation Coefficient

Hollywood Bowl  Rmy Cointreau

Very good diversification

The 3 months correlation between Hollywood and Rmy is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Rmy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmy Cointreau SA 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 Rmy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmy Cointreau SA has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Rmy Cointreau go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Rmy Cointreau

Assuming the 90 days horizon Hollywood Bowl is expected to generate 4.51 times less return on investment than Rmy Cointreau. But when comparing it to its historical volatility, Hollywood Bowl Group is 1.55 times less risky than Rmy Cointreau. It trades about 0.11 of its potential returns per unit of risk. Rmy Cointreau SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  5,515  in Rmy Cointreau SA on September 12, 2024 and sell it today you would earn a total of  845.00  from holding Rmy Cointreau SA or generate 15.32% return on investment over 90 days.

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

Hollywood Bowl Group  vs.  Rmy Cointreau SA

Hollywood Bowl Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hollywood Bowl Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hollywood Bowl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rmy Cointreau SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rmy Cointreau SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rmy Cointreau is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hollywood Bowl and Rmy Cointreau

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

The idea behind Hollywood Bowl Group and Rmy Cointreau SA 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.