Correlation Between Penn National and PEPTONIC MEDICAL

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

Diversification Opportunities for Penn National and PEPTONIC MEDICAL

0.0

Correlation Coefficient

Penn National  PEPTONIC MEDICAL

Pay attention - limited upside

The 3 months correlation between Penn and PEPTONIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and PEPTONIC MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPTONIC MEDICAL 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 PEPTONIC MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPTONIC MEDICAL has no effect on the direction of Penn National i.e., Penn National and PEPTONIC MEDICAL go up and down completely randomly.

Pair Corralation between Penn National and PEPTONIC MEDICAL

If you would invest  0.02  in PEPTONIC MEDICAL on October 9, 2024 and sell it today you would earn a total of  0.00  from holding PEPTONIC MEDICAL or generate 0.0% return on investment over 90 days.

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

Penn National Gaming  vs.  PEPTONIC MEDICAL

Penn National Gaming

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penn National reported solid returns over the last few months and may actually be approaching a breakup point.

PEPTONIC MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPTONIC MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PEPTONIC MEDICAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Penn National and PEPTONIC MEDICAL

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

The idea behind Penn National Gaming and PEPTONIC MEDICAL 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.