Correlation Between Hollywood Bowl and SEKISUI CHEMICAL

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

Diversification Opportunities for Hollywood Bowl and SEKISUI CHEMICAL

-0.18

Correlation Coefficient

Hollywood Bowl  SEKISUI CHEMICAL

Good diversification

The 3 months correlation between Hollywood and SEKISUI is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL 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 SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and SEKISUI CHEMICAL go up and down completely randomly.

Pair Corralation between Hollywood Bowl and SEKISUI CHEMICAL

Assuming the 90 days horizon Hollywood Bowl Group is expected to under-perform the SEKISUI CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, Hollywood Bowl Group is 1.01 times less risky than SEKISUI CHEMICAL. The stock trades about -0.05 of its potential returns per unit of risk. The SEKISUI CHEMICAL is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,380  in SEKISUI CHEMICAL on October 5, 2024 and sell it today you would earn a total of  260.00  from holding SEKISUI CHEMICAL or generate 18.84% 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.  SEKISUI CHEMICAL

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.

SEKISUI CHEMICAL

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SEKISUI CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, SEKISUI CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollywood Bowl and SEKISUI CHEMICAL

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

The idea behind Hollywood Bowl Group and SEKISUI CHEMICAL 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.