Correlation Between SOCKET MOBILE and Penn National

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

By analyzing existing cross correlation between SOCKET MOBILE NEW and Penn National Gaming, you can compare the effects of market volatilities on SOCKET MOBILE and Penn National 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 SOCKET MOBILE with a short position of Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOCKET MOBILE and Penn National.

Diversification Opportunities for SOCKET MOBILE and Penn National

0.43

Correlation Coefficient

SOCKET MOBILE  Penn National

Very weak diversification

The 3 months correlation between SOCKET and Penn is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SOCKET MOBILE NEW and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming and SOCKET MOBILE 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 SOCKET MOBILE NEW are associated (or correlated) with Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of SOCKET MOBILE i.e., SOCKET MOBILE and Penn National go up and down completely randomly.

Pair Corralation between SOCKET MOBILE and Penn National

Assuming the 90 days trading horizon SOCKET MOBILE NEW is expected to under-perform the Penn National. In addition to that, SOCKET MOBILE is 1.13 times more volatile than Penn National Gaming. It trades about -0.08 of its total potential returns per unit of risk. Penn National Gaming is currently generating about -0.04 per unit of volatility. If you would invest  1,736  in Penn National Gaming on December 20, 2024 and sell it today you would lose (168.00) from holding Penn National Gaming or give up 9.68% of portfolio value over 90 days.

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

SOCKET MOBILE NEW  vs.  Penn National Gaming

SOCKET MOBILE NEW

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOCKET MOBILE NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SOCKET MOBILE and Penn National

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

The idea behind SOCKET MOBILE NEW and Penn National Gaming 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.