Correlation Between Beijing MediaLimited and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Beijing MediaLimited and Hollywood Bowl 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 Beijing MediaLimited and Hollywood Bowl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Hollywood Bowl Group, you can compare the effects of market volatilities on Beijing MediaLimited and Hollywood Bowl 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 Beijing MediaLimited with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing MediaLimited and Hollywood Bowl.
Diversification Opportunities for Beijing MediaLimited and Hollywood Bowl
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Beijing and Hollywood is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group and Beijing MediaLimited 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 Beijing Media are associated (or correlated) with Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Beijing MediaLimited i.e., Beijing MediaLimited and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Beijing MediaLimited and Hollywood Bowl
Assuming the 90 days horizon Beijing Media is expected to generate 2.25 times more return on investment than Hollywood Bowl. However, Beijing MediaLimited is 2.25 times more volatile than Hollywood Bowl Group. It trades about 0.04 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about -0.13 per unit of risk. If you would invest 3.55 in Beijing Media on August 29, 2024 and sell it today you would earn a total of 0.05 from holding Beijing Media or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Media vs. Hollywood Bowl Group
Performance |
| Timeline |
| Beijing MediaLimited |
| Hollywood Bowl Group |
Beijing MediaLimited and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing MediaLimited and Hollywood Bowl
The main advantage of trading using opposite Beijing MediaLimited and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing MediaLimited position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| Beijing MediaLimited vs. The Interpublic Group | Beijing MediaLimited vs. Superior Plus Corp | Beijing MediaLimited vs. NMI Holdings | Beijing MediaLimited vs. Origin Agritech |
| Hollywood Bowl vs. The Home Depot | Hollywood Bowl vs. SHIP HEALTHCARE HLDGINC | Hollywood Bowl vs. KB HOME | Hollywood Bowl vs. Diamondrock Hospitality Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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