Correlation Between Penn National and Garware Technical

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

Diversification Opportunities for Penn National and Garware Technical

0.04

Correlation Coefficient

Penn National  Garware Technical

Significant diversification

The 3 months correlation between Penn and Garware is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Garware Technical Fibres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Technical Fibres 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 Garware Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Technical Fibres has no effect on the direction of Penn National i.e., Penn National and Garware Technical go up and down completely randomly.

Pair Corralation between Penn National and Garware Technical

Given the investment horizon of 90 days Penn National is expected to generate 104.37 times less return on investment than Garware Technical. But when comparing it to its historical volatility, Penn National Gaming is 42.32 times less risky than Garware Technical. It trades about 0.05 of its potential returns per unit of risk. Garware Technical Fibres is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  80,396  in Garware Technical Fibres on October 22, 2024 and sell it today you would earn a total of  879.00  from holding Garware Technical Fibres or generate 1.09% return on investment over 90 days.

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

Penn National Gaming  vs.  Garware Technical Fibres

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.

Garware Technical Fibres

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Technical Fibres are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Garware Technical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and Garware Technical

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

The idea behind Penn National Gaming and Garware Technical Fibres 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.