Correlation Between Hollywood Bowl and Pfeiffer Vacuum

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

Diversification Opportunities for Hollywood Bowl and Pfeiffer Vacuum

0.2

Correlation Coefficient

Hollywood Bowl  Pfeiffer Vacuum

Modest diversification

The 3 months correlation between Hollywood and Pfeiffer is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Pfeiffer Vacuum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfeiffer Vacuum Tech 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 Pfeiffer Vacuum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfeiffer Vacuum Tech has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Pfeiffer Vacuum go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Pfeiffer Vacuum

Assuming the 90 days trading horizon Hollywood Bowl Group is expected to generate 3.04 times more return on investment than Pfeiffer Vacuum. However, Hollywood Bowl is 3.04 times more volatile than Pfeiffer Vacuum Technology. It trades about 0.03 of its potential returns per unit of risk. Pfeiffer Vacuum Technology is currently generating about -0.02 per unit of risk. If you would invest  23,655  in Hollywood Bowl Group on September 29, 2024 and sell it today you would earn a total of  5,545  from holding Hollywood Bowl Group or generate 23.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hollywood Bowl Group  vs.  Pfeiffer Vacuum Technology

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.

Pfeiffer Vacuum Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfeiffer Vacuum Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pfeiffer Vacuum is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hollywood Bowl and Pfeiffer Vacuum

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

The idea behind Hollywood Bowl Group and Pfeiffer Vacuum Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.