Correlation Between Hollywood Bowl and Odfjell Drilling

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

Diversification Opportunities for Hollywood Bowl and Odfjell Drilling

-0.29

Correlation Coefficient

Hollywood Bowl  Odfjell Drilling

Very good diversification

The 3 months correlation between Hollywood and Odfjell is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling 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 Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Odfjell Drilling go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Odfjell Drilling

Assuming the 90 days trading horizon Hollywood Bowl is expected to generate 4.77 times less return on investment than Odfjell Drilling. But when comparing it to its historical volatility, Hollywood Bowl Group is 1.26 times less risky than Odfjell Drilling. It trades about 0.02 of its potential returns per unit of risk. Odfjell Drilling is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,596  in Odfjell Drilling on October 11, 2024 and sell it today you would earn a total of  3,084  from holding Odfjell Drilling or generate 118.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Hollywood Bowl Group  vs.  Odfjell Drilling

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Odfjell Drilling

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Odfjell Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hollywood Bowl and Odfjell Drilling

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

The idea behind Hollywood Bowl Group and Odfjell Drilling 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.