Correlation Between Penn National and Balkan Mining

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

Diversification Opportunities for Penn National and Balkan Mining

0.02

Correlation Coefficient

Penn National  Balkan Mining

Significant diversification

The 3 months correlation between Penn and Balkan is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Balkan Mining and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balkan Mining 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 Balkan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balkan Mining has no effect on the direction of Penn National i.e., Penn National and Balkan Mining go up and down completely randomly.

Pair Corralation between Penn National and Balkan Mining

Given the investment horizon of 90 days Penn National Gaming is expected to under-perform the Balkan Mining. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 1.63 times less risky than Balkan Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Balkan Mining and is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5.40  in Balkan Mining and on October 8, 2024 and sell it today you would lose (0.40) from holding Balkan Mining and or give up 7.41% of portfolio value over 90 days.

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

Penn National Gaming  vs.  Balkan Mining and

Penn National Gaming

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Penn National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Balkan Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balkan Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Balkan Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Penn National and Balkan Mining

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

The idea behind Penn National Gaming and Balkan Mining and 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.