Correlation Between HEXINDO ADIPERKASA and PENN Entertainment

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

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

Diversification Opportunities for HEXINDO ADIPERKASA and PENN Entertainment

-0.68

Correlation Coefficient

HEXINDO ADIPERKASA  PENN Entertainment

Excellent diversification

The 3 months correlation between HEXINDO and PENN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding HEXINDO ADIPERKASA and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA are associated (or correlated) with PENN Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN Entertainment has no effect on the direction of HEXINDO ADIPERKASA i.e., HEXINDO ADIPERKASA and PENN Entertainment go up and down completely randomly.

Pair Corralation between HEXINDO ADIPERKASA and PENN Entertainment

Assuming the 90 days trading horizon HEXINDO ADIPERKASA is expected to under-perform the PENN Entertainment. In addition to that, HEXINDO ADIPERKASA is 1.21 times more volatile than PENN Entertainment. It trades about -0.06 of its total potential returns per unit of risk. PENN Entertainment is currently generating about 0.06 per unit of volatility. If you would invest  1,686  in PENN Entertainment on October 11, 2024 and sell it today you would earn a total of  124.00  from holding PENN Entertainment or generate 7.35% return on investment over 90 days.

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

HEXINDO ADIPERKASA  vs.  PENN Entertainment

HEXINDO ADIPERKASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXINDO ADIPERKASA 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PENN Entertainment

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PENN Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HEXINDO ADIPERKASA and PENN Entertainment

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

The idea behind HEXINDO ADIPERKASA and PENN Entertainment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.