Correlation Between PENN Entertainment, and New Oriental

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Can any of the company-specific risk be diversified away by investing in both PENN Entertainment, and New Oriental 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 New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN Entertainment, and New Oriental Education, you can compare the effects of market volatilities on PENN Entertainment, and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment, and New Oriental.

Diversification Opportunities for PENN Entertainment, and New Oriental

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between PENN and New is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and New Oriental go up and down completely randomly.

Pair Corralation between PENN Entertainment, and New Oriental

Assuming the 90 days trading horizon PENN Entertainment, is expected to under-perform the New Oriental. But the stock apears to be less risky and, when comparing its historical volatility, PENN Entertainment, is 10.91 times less risky than New Oriental. The stock trades about -0.31 of its potential returns per unit of risk. The New Oriental Education is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,529  in New Oriental Education on October 12, 2024 and sell it today you would earn a total of  80.00  from holding New Oriental Education or generate 3.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PENN Entertainment,  vs.  New Oriental Education

 Performance 
       Timeline  
PENN Entertainment, 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, PENN Entertainment, sustained solid returns over the last few months and may actually be approaching a breakup point.
New Oriental Education 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, New Oriental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PENN Entertainment, and New Oriental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PENN Entertainment, and New Oriental

The main advantage of trading using opposite PENN Entertainment, and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN Entertainment, position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.
The idea behind PENN Entertainment, and New Oriental Education 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.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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