Correlation Between Penn National and Sino AG

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

Diversification Opportunities for Penn National and Sino AG

0.05

Correlation Coefficient

Penn National  Sino AG

Significant diversification

The 3 months correlation between Penn and Sino is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Sino AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino AG 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 Sino AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino AG has no effect on the direction of Penn National i.e., Penn National and Sino AG go up and down completely randomly.

Pair Corralation between Penn National and Sino AG

Given the investment horizon of 90 days Penn National is expected to generate 7.53 times less return on investment than Sino AG. In addition to that, Penn National is 1.28 times more volatile than Sino AG. It trades about 0.02 of its total potential returns per unit of risk. Sino AG is currently generating about 0.19 per unit of volatility. If you would invest  5,400  in Sino AG on October 7, 2024 and sell it today you would earn a total of  1,400  from holding Sino AG or generate 25.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Penn National Gaming  vs.  Sino AG

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.

Sino AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sino AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sino AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and Sino AG

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

The idea behind Penn National Gaming and Sino AG 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.