Correlation Between Penn National and OSRAM LICHT

Can any of the company-specific risk be diversified away by investing in both Penn National and OSRAM LICHT 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 OSRAM LICHT 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 OSRAM LICHT N, you can compare the effects of market volatilities on Penn National and OSRAM LICHT 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 OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and OSRAM LICHT.

Diversification Opportunities for Penn National and OSRAM LICHT

0.54

Correlation Coefficient

Penn National  OSRAM LICHT

Very weak diversification

The 3 months correlation between Penn and OSRAM is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N 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 OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of Penn National i.e., Penn National and OSRAM LICHT go up and down completely randomly.

Pair Corralation between Penn National and OSRAM LICHT

Assuming the 90 days horizon Penn National Gaming is expected to generate 10.23 times more return on investment than OSRAM LICHT. However, Penn National is 10.23 times more volatile than OSRAM LICHT N. It trades about 0.02 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.11 per unit of risk. If you would invest  1,417  in Penn National Gaming on May 13, 2025 and sell it today you would earn a total of  26.00  from holding Penn National Gaming or generate 1.83% return on investment over 90 days.

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

Penn National Gaming  vs.  OSRAM LICHT N

Penn National Gaming

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Penn National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

OSRAM LICHT N

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in OSRAM LICHT N are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, OSRAM LICHT is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Penn National and OSRAM LICHT

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

The idea behind Penn National Gaming and OSRAM LICHT N 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.