Correlation Between Penn National and SEOWONINTECHCoLtd

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

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

Diversification Opportunities for Penn National and SEOWONINTECHCoLtd

-0.15

Correlation Coefficient

Penn National  SEOWONINTECHCoLtd

Good diversification

The 3 months correlation between Penn and SEOWONINTECHCoLtd is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and SEOWONINTECHCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOWONINTECHCoLtd and Penn National 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 Penn National Gaming are associated (or correlated) with SEOWONINTECHCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOWONINTECHCoLtd has no effect on the direction of Penn National i.e., Penn National and SEOWONINTECHCoLtd go up and down completely randomly.

Pair Corralation between Penn National and SEOWONINTECHCoLtd

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the SEOWONINTECHCoLtd. In addition to that, Penn National is 2.69 times more volatile than SEOWONINTECHCoLtd. It trades about -0.01 of its total potential returns per unit of risk. SEOWONINTECHCoLtd is currently generating about 0.04 per unit of volatility. If you would invest  543,232  in SEOWONINTECHCoLtd on October 7, 2024 and sell it today you would earn a total of  7,768  from holding SEOWONINTECHCoLtd or generate 1.43% return on investment over 90 days.

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

Penn National Gaming  vs.  SEOWONINTECHCoLtd

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Penn National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SEOWONINTECHCoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEOWONINTECHCoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEOWONINTECHCoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Penn National and SEOWONINTECHCoLtd

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

The idea behind Penn National Gaming and SEOWONINTECHCoLtd 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .