Correlation Between Hollywood Bowl and Li Ning
Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl and Li Ning 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 Li Ning 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 Li Ning Company, you can compare the effects of market volatilities on Hollywood Bowl and Li Ning 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 Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and Li Ning.
Diversification Opportunities for Hollywood Bowl and Li Ning
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hollywood and LNLB is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Li Ning Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning Company 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 Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning Company has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Li Ning go up and down completely randomly.
Pair Corralation between Hollywood Bowl and Li Ning
Assuming the 90 days horizon Hollywood Bowl Group is expected to under-perform the Li Ning. But the stock apears to be less risky and, when comparing its historical volatility, Hollywood Bowl Group is 2.1 times less risky than Li Ning. The stock trades about -0.13 of its potential returns per unit of risk. The Li Ning Company is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 185.00 in Li Ning Company on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Li Ning Company or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hollywood Bowl Group vs. Li Ning Company
Performance |
| Timeline |
| Hollywood Bowl Group |
| Li Ning Company |
Hollywood Bowl and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hollywood Bowl and Li Ning
The main advantage of trading using opposite Hollywood Bowl and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl position performs unexpectedly, Li Ning 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 Li Ning will offset losses from the drop in Li Ning's long position.| Hollywood Bowl vs. Li Ning Company | Hollywood Bowl vs. Superior Plus Corp | Hollywood Bowl vs. NMI Holdings | Hollywood Bowl vs. SIVERS SEMICONDUCTORS AB |
| Li Ning vs. Superior Plus Corp | Li Ning vs. NMI Holdings | Li Ning vs. SIVERS SEMICONDUCTORS AB | Li Ning vs. Talanx AG |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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