Correlation Between Dolphin Entertainment and RCI Hospitality

Can any of the company-specific risk be diversified away by investing in both Dolphin Entertainment and RCI Hospitality 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 Dolphin Entertainment and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dolphin Entertainment and RCI Hospitality Holdings, you can compare the effects of market volatilities on Dolphin Entertainment and RCI Hospitality 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 Dolphin Entertainment with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Entertainment and RCI Hospitality.

Diversification Opportunities for Dolphin Entertainment and RCI Hospitality

0.23

Correlation Coefficient

Dolphin Entertainment  RCI Hospitality

Modest diversification

The 3 months correlation between Dolphin and RCI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings and Dolphin Entertainment 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 Dolphin Entertainment are associated (or correlated) with RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and RCI Hospitality go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and RCI Hospitality

Given the investment horizon of 90 days Dolphin Entertainment is expected to generate 2.59 times more return on investment than RCI Hospitality. However, Dolphin Entertainment is 2.59 times more volatile than RCI Hospitality Holdings. It trades about -0.01 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.19 per unit of risk. If you would invest  114.00  in Dolphin Entertainment on December 26, 2024 and sell it today you would lose (12.00) from holding Dolphin Entertainment or give up 10.53% of portfolio value over 90 days.

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

Dolphin Entertainment  vs.  RCI Hospitality Holdings

Dolphin Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dolphin Entertainment is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCI Hospitality Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Dolphin Entertainment and RCI Hospitality

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

The idea behind Dolphin Entertainment and RCI Hospitality Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.