Correlation Between PENN NATL and CITIC Telecom

Can any of the company-specific risk be diversified away by investing in both PENN NATL and CITIC Telecom 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 NATL and CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PENN NATL GAMING and CITIC Telecom International, you can compare the effects of market volatilities on PENN NATL and CITIC Telecom 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 NATL with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and CITIC Telecom.

Diversification Opportunities for PENN NATL and CITIC Telecom

0.05

Correlation Coefficient

PENN NATL  CITIC Telecom

Significant diversification

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

Pair Corralation between PENN NATL and CITIC Telecom

Assuming the 90 days trading horizon PENN NATL GAMING is expected to under-perform the CITIC Telecom. But the stock apears to be less risky and, when comparing its historical volatility, PENN NATL GAMING is 1.08 times less risky than CITIC Telecom. The stock trades about -0.06 of its potential returns per unit of risk. The CITIC Telecom International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  27.00  in CITIC Telecom International on October 8, 2024 and sell it today you would earn a total of  0.00  from holding CITIC Telecom International or generate 0.0% return on investment over 90 days.

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

PENN NATL GAMING  vs.  CITIC Telecom International

PENN NATL GAMING

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PENN NATL GAMING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PENN NATL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CITIC Telecom Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CITIC Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PENN NATL and CITIC Telecom

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

The idea behind PENN NATL GAMING and CITIC Telecom International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.