Correlation Between Penn National and Daido Steel
Can any of the company-specific risk be diversified away by investing in both Penn National and Daido Steel 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 Daido Steel 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 Daido Steel Co, you can compare the effects of market volatilities on Penn National and Daido Steel 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 Daido Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Daido Steel.
Diversification Opportunities for Penn National and Daido Steel
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Daido is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Daido Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daido Steel 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 Daido Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daido Steel has no effect on the direction of Penn National i.e., Penn National and Daido Steel go up and down completely randomly.
Pair Corralation between Penn National and Daido Steel
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Daido Steel. In addition to that, Penn National is 1.74 times more volatile than Daido Steel Co. It trades about -0.01 of its total potential returns per unit of risk. Daido Steel Co is currently generating about 0.07 per unit of volatility. If you would invest 730.00 in Daido Steel Co on December 2, 2024 and sell it today you would earn a total of 45.00 from holding Daido Steel Co or generate 6.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Penn National Gaming vs. Daido Steel Co
Performance |
Timeline |
Penn National Gaming |
Daido Steel |
Penn National and Daido Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penn National and Daido Steel
The main advantage of trading using opposite Penn National and Daido Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Daido Steel 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 Daido Steel will offset losses from the drop in Daido Steel's long position.Penn National vs. REVO INSURANCE SPA | Penn National vs. New Residential Investment | Penn National vs. PennantPark Investment | Penn National vs. REINET INVESTMENTS SCA |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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