Correlation Between PENN Entertainment and CHINA CONBANK

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

By analyzing existing cross correlation between PENN Entertainment and CHINA BANK ADR20, you can compare the effects of market volatilities on PENN Entertainment and CHINA CONBANK 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 Entertainment with a short position of CHINA CONBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment and CHINA CONBANK.

Diversification Opportunities for PENN Entertainment and CHINA CONBANK

0.15

Correlation Coefficient

PENN Entertainment  CHINA CONBANK

Average diversification

The 3 months correlation between PENN and CHINA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 and PENN Entertainment 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 Entertainment are associated (or correlated) with CHINA CONBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of PENN Entertainment i.e., PENN Entertainment and CHINA CONBANK go up and down completely randomly.

Pair Corralation between PENN Entertainment and CHINA CONBANK

Assuming the 90 days trading horizon PENN Entertainment is expected to under-perform the CHINA CONBANK. In addition to that, PENN Entertainment is 1.51 times more volatile than CHINA BANK ADR20. It trades about -0.02 of its total potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.06 per unit of volatility. If you would invest  945.00  in CHINA BANK ADR20 on October 4, 2024 and sell it today you would earn a total of  605.00  from holding CHINA BANK ADR20 or generate 64.02% return on investment over 90 days.

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

PENN Entertainment  vs.  CHINA BANK ADR20

PENN Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PENN Entertainment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CHINA BANK ADR20

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA BANK ADR20 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA CONBANK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN Entertainment and CHINA CONBANK

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

The idea behind PENN Entertainment and CHINA BANK ADR20 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.