Correlation Between Hollywood Bowl and Catena Media

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

Diversification Opportunities for Hollywood Bowl and Catena Media

-0.28

Correlation Coefficient

Hollywood Bowl  Catena Media

Very good diversification

The 3 months correlation between Hollywood and Catena is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Catena Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media PLC 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 Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media PLC has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Catena Media go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Catena Media

Assuming the 90 days trading horizon Hollywood Bowl Group is expected to generate 0.32 times more return on investment than Catena Media. However, Hollywood Bowl Group is 3.12 times less risky than Catena Media. It trades about -0.01 of its potential returns per unit of risk. Catena Media PLC is currently generating about -0.19 per unit of risk. If you would invest  32,300  in Hollywood Bowl Group on September 3, 2024 and sell it today you would lose (300.00) from holding Hollywood Bowl Group or give up 0.93% of portfolio value over 90 days.

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

Hollywood Bowl Group  vs.  Catena Media PLC

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Catena Media PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catena Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hollywood Bowl and Catena Media

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

The idea behind Hollywood Bowl Group and Catena Media PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.