Correlation Between Penn National and EPSILON HEALTHCARE

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

Diversification Opportunities for Penn National and EPSILON HEALTHCARE

0.0

Correlation Coefficient

Penn National  EPSILON HEALTHCARE

Pay attention - limited upside

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

Pair Corralation between Penn National and EPSILON HEALTHCARE

If you would invest  1,781  in Penn National Gaming on October 23, 2024 and sell it today you would earn a total of  148.00  from holding Penn National Gaming or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Penn National Gaming  vs.  EPSILON HEALTHCARE LTD

Penn National Gaming

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 5 (%) 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.

EPSILON HEALTHCARE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Penn National and EPSILON HEALTHCARE

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

The idea behind Penn National Gaming and EPSILON HEALTHCARE LTD 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.