Correlation Between Penns Woods and Neogames

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

By analyzing existing cross correlation between Penns Woods Bancorp and Neogames SA, you can compare the effects of market volatilities on Penns Woods and Neogames 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 Penns Woods with a short position of Neogames. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Neogames.

Diversification Opportunities for Penns Woods and Neogames

0.71

Correlation Coefficient

Penns Woods  Neogames

Poor diversification

The 3 months correlation between Penns and Neogames is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Neogames SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogames SA and Penns Woods 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 Penns Woods Bancorp are associated (or correlated) with Neogames. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogames SA has no effect on the direction of Penns Woods i.e., Penns Woods and Neogames go up and down completely randomly.

Pair Corralation between Penns Woods and Neogames

Given the investment horizon of 90 days Penns Woods is expected to generate 15.66 times less return on investment than Neogames. But when comparing it to its historical volatility, Penns Woods Bancorp is 5.29 times less risky than Neogames. It trades about 0.03 of its potential returns per unit of risk. Neogames SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,229  in Neogames SA on October 3, 2024 and sell it today you would earn a total of  1,480  from holding Neogames SA or generate 120.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	26.87%
Values	Daily Returns

Penns Woods Bancorp  vs.  Neogames SA

Penns Woods Bancorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penns Woods Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Penns Woods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Neogames SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogames SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Neogames is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Penns Woods and Neogames

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

The idea behind Penns Woods Bancorp and Neogames SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.