Correlation Between LPKF Laser and PENN Entertainment

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

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

Diversification Opportunities for LPKF Laser and PENN Entertainment

-0.47

Correlation Coefficient

LPKF Laser  PENN Entertainment

Very good diversification

The 3 months correlation between LPKF and PENN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment and LPKF Laser 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 LPKF Laser Electronics 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 LPKF Laser i.e., LPKF Laser and PENN Entertainment go up and down completely randomly.

Pair Corralation between LPKF Laser and PENN Entertainment

Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the PENN Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 1.99 times less risky than PENN Entertainment. The stock trades about -0.05 of its potential returns per unit of risk. The PENN Entertainment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,732  in PENN Entertainment on October 23, 2024 and sell it today you would earn a total of  170.00  from holding PENN Entertainment or generate 9.82% return on investment over 90 days.

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

LPKF Laser Electronics  vs.  PENN Entertainment

LPKF Laser Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPKF Laser Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LPKF Laser may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PENN Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PENN Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LPKF Laser and PENN Entertainment

The main advantage of trading using opposite LPKF Laser and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser 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 LPKF Laser Electronics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.