Correlation Between PennantPark Investment and China Resources
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and China Resources 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 China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and China Resources Beer, you can compare the effects of market volatilities on PennantPark Investment and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and China Resources.
Diversification Opportunities for PennantPark Investment and China Resources
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PennantPark and China is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and China Resources go up and down completely randomly.
Pair Corralation between PennantPark Investment and China Resources
Assuming the 90 days horizon PennantPark Investment is expected to generate 0.85 times more return on investment than China Resources. However, PennantPark Investment is 1.18 times less risky than China Resources. It trades about 0.07 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.05 per unit of risk. If you would invest 660.00 in PennantPark Investment on October 25, 2024 and sell it today you would earn a total of 14.00 from holding PennantPark Investment or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. China Resources Beer
Performance |
| Timeline |
| PennantPark Investment |
| China Resources Beer |
PennantPark Investment and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and China Resources
The main advantage of trading using opposite PennantPark Investment and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| PennantPark Investment vs. Heidelberg Materials AG | PennantPark Investment vs. PICKN PAY STORES | PennantPark Investment vs. Rayonier Advanced Materials | PennantPark Investment vs. COSTCO WHOLESALE CDR |
| China Resources vs. Verizon Communications | China Resources vs. National Beverage Corp | China Resources vs. GEELY AUTOMOBILE | China Resources vs. Singapore Telecommunications Limited |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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