Correlation Between Penn National and Hongkong Land
Can any of the company-specific risk be diversified away by investing in both Penn National and Hongkong Land 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 Hongkong Land 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 Hongkong Land Holdings, you can compare the effects of market volatilities on Penn National and Hongkong Land 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 Hongkong Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Hongkong Land.
Diversification Opportunities for Penn National and Hongkong Land
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penn and Hongkong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Hongkong Land Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongkong Land Holdings 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 Hongkong Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongkong Land Holdings has no effect on the direction of Penn National i.e., Penn National and Hongkong Land go up and down completely randomly.
Pair Corralation between Penn National and Hongkong Land
Assuming the 90 days horizon Penn National is expected to generate 5.61 times less return on investment than Hongkong Land. In addition to that, Penn National is 1.17 times more volatile than Hongkong Land Holdings. It trades about 0.02 of its total potential returns per unit of risk. Hongkong Land Holdings is currently generating about 0.13 per unit of volatility. If you would invest 292.00 in Hongkong Land Holdings on September 26, 2024 and sell it today you would earn a total of 130.00 from holding Hongkong Land Holdings or generate 44.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Penn National Gaming vs. Hongkong Land Holdings
Performance |
Timeline |
Penn National Gaming |
Hongkong Land Holdings |
Penn National and Hongkong Land Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penn National and Hongkong Land
The main advantage of trading using opposite Penn National and Hongkong Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Hongkong Land 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 Hongkong Land will offset losses from the drop in Hongkong Land's long position.Penn National vs. Las Vegas Sands | Penn National vs. Galaxy Entertainment Group | Penn National vs. Sands China | Penn National vs. MGM Resorts International |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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