Correlation Between PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and Hollywood Bowl Group, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl

-0.18

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4/  Hollywood Bowl

Good diversification

The 3 months correlation between PROSIEBENSAT1 and Hollywood is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4/ is expected to generate 1.45 times less return on investment than Hollywood Bowl. In addition to that, PROSIEBENSAT1 MEDIADR4/ is 1.63 times more volatile than Hollywood Bowl Group. It trades about 0.04 of its total potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.09 per unit of volatility. If you would invest  364.00  in Hollywood Bowl Group on September 17, 2024 and sell it today you would earn a total of  34.00  from holding Hollywood Bowl Group or generate 9.34% return on investment over 90 days.

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

PROSIEBENSAT1 MEDIADR4  vs.  Hollywood Bowl Group

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PROSIEBENSAT1 MEDIADR4 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, PROSIEBENSAT1 MEDIADR4/ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hollywood Bowl Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hollywood Bowl Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hollywood Bowl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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.

The idea behind PROSIEBENSAT1 MEDIADR4 and Hollywood Bowl Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.