Correlation Between Penn National and Jiangsu Sainty

Can any of the company-specific risk be diversified away by investing in both Penn National and Jiangsu Sainty 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 Jiangsu Sainty 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 Jiangsu Sainty Corp, you can compare the effects of market volatilities on Penn National and Jiangsu Sainty 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 Jiangsu Sainty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Jiangsu Sainty.

Diversification Opportunities for Penn National and Jiangsu Sainty

-0.19

Correlation Coefficient

Penn National  Jiangsu Sainty

Good diversification

The 3 months correlation between Penn and Jiangsu is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Jiangsu Sainty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Sainty Corp 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 Jiangsu Sainty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Sainty Corp has no effect on the direction of Penn National i.e., Penn National and Jiangsu Sainty go up and down completely randomly.

Pair Corralation between Penn National and Jiangsu Sainty

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Jiangsu Sainty. In addition to that, Penn National is 1.81 times more volatile than Jiangsu Sainty Corp. It trades about -0.01 of its total potential returns per unit of risk. Jiangsu Sainty Corp is currently generating about 0.09 per unit of volatility. If you would invest  433.00  in Jiangsu Sainty Corp on December 23, 2024 and sell it today you would earn a total of  38.00  from holding Jiangsu Sainty Corp or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Penn National Gaming  vs.  Jiangsu Sainty Corp

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Jiangsu Sainty Corp

Risk-Adjusted Performance

OK

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

Pair Trading with Penn National and Jiangsu Sainty

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

The idea behind Penn National Gaming and Jiangsu Sainty Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.