Correlation Between Penn National and Aeries Technology

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

Diversification Opportunities for Penn National and Aeries Technology

-0.42

Correlation Coefficient

Penn National  Aeries Technology

Very good diversification

The 3 months correlation between Penn and Aeries is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Aeries Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeries Technology 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 Aeries Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeries Technology has no effect on the direction of Penn National i.e., Penn National and Aeries Technology go up and down completely randomly.

Pair Corralation between Penn National and Aeries Technology

Given the investment horizon of 90 days Penn National is expected to generate 1501.13 times less return on investment than Aeries Technology. But when comparing it to its historical volatility, Penn National Gaming is 5.54 times less risky than Aeries Technology. It trades about 0.0 of its potential returns per unit of risk. Aeries Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Aeries Technology on October 8, 2024 and sell it today you would earn a total of  13.00  from holding Aeries Technology or generate 17.11% return on investment over 90 days.

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

Penn National Gaming  vs.  Aeries Technology

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Insignificant

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.

Aeries Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeries Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Pair Trading with Penn National and Aeries Technology

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

The idea behind Penn National Gaming and Aeries Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.