Correlation Between PennantPark Investment and Haier Smart

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Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Haier Smart 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 PennantPark Investment and Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Haier Smart Home, you can compare the effects of market volatilities on PennantPark Investment and Haier Smart 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 PennantPark Investment with a short position of Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Haier Smart.

Diversification Opportunities for PennantPark Investment and Haier Smart

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between PennantPark and Haier is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and PennantPark Investment 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 PennantPark Investment are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Haier Smart go up and down completely randomly.

Pair Corralation between PennantPark Investment and Haier Smart

Assuming the 90 days horizon PennantPark Investment is expected to generate 1.77 times more return on investment than Haier Smart. However, PennantPark Investment is 1.77 times more volatile than Haier Smart Home. It trades about 0.07 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.01 per unit of risk. If you would invest  639.00  in PennantPark Investment on August 30, 2024 and sell it today you would earn a total of  19.00  from holding PennantPark Investment or generate 2.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PennantPark Investment  vs.  Haier Smart Home

 Performance 
       Timeline  
PennantPark Investment 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Haier Smart Home 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Haier Smart Home are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Haier Smart may actually be approaching a critical reversion point that can send shares even higher in December 2024.

PennantPark Investment and Haier Smart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PennantPark Investment and Haier Smart

The main advantage of trading using opposite PennantPark Investment and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.
The idea behind PennantPark Investment and Haier Smart Home 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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