Correlation Between Advanced Medical and Hollywood Bowl

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

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

Diversification Opportunities for Advanced Medical and Hollywood Bowl

0.02

Correlation Coefficient

Advanced Medical  Hollywood Bowl

Significant diversification

The 3 months correlation between Advanced and Hollywood is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions 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 Advanced Medical 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 Advanced Medical Solutions 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 Advanced Medical i.e., Advanced Medical and Hollywood Bowl go up and down completely randomly.

Pair Corralation between Advanced Medical and Hollywood Bowl

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Hollywood Bowl. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Medical Solutions is 1.42 times less risky than Hollywood Bowl. The stock trades about -0.15 of its potential returns per unit of risk. The Hollywood Bowl Group is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  31,700  in Hollywood Bowl Group on September 24, 2024 and sell it today you would lose (2,150) from holding Hollywood Bowl Group or give up 6.78% of portfolio value over 90 days.

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

Advanced Medical Solutions  vs.  Hollywood Bowl Group

Advanced Medical Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 comparatively stable basic indicators, Hollywood Bowl is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Advanced Medical and Hollywood Bowl

The main advantage of trading using opposite Advanced Medical and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical 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 Advanced Medical Solutions 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.