Correlation Between Penn National and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Penn National and Sunny Optical 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 Sunny Optical 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 Sunny Optical Technology, you can compare the effects of market volatilities on Penn National and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Sunny Optical.
Diversification Opportunities for Penn National and Sunny Optical
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Penn and Sunny is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Penn National i.e., Penn National and Sunny Optical go up and down completely randomly.
Pair Corralation between Penn National and Sunny Optical
Assuming the 90 days horizon Penn National Gaming is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 1.04 times less risky than Sunny Optical. The stock trades about -0.01 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,119 in Sunny Optical Technology on October 11, 2024 and sell it today you would lose (302.00) from holding Sunny Optical Technology or give up 26.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Sunny Optical Technology
Performance |
| Timeline |
| Penn National Gaming |
| Sunny Optical Technology |
Penn National and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Sunny Optical
The main advantage of trading using opposite Penn National and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| Penn National vs. THRACE PLASTICS | Penn National vs. AM EAGLE OUTFITTERS | Penn National vs. NEWELL RUBBERMAID | Penn National vs. VIENNA INSURANCE GR |
| Sunny Optical vs. GREENX METALS LTD | Sunny Optical vs. De Grey Mining | Sunny Optical vs. Kingdee International Software | Sunny Optical vs. Lion Biotechnologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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