Correlation Between PennantPark Investment and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Hitachi Construction 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 Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Hitachi Construction Machinery, you can compare the effects of market volatilities on PennantPark Investment and Hitachi Construction 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Hitachi Construction.
Diversification Opportunities for PennantPark Investment and Hitachi Construction
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennantPark and Hitachi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Hitachi Construction go up and down completely randomly.
Pair Corralation between PennantPark Investment and Hitachi Construction
Assuming the 90 days horizon PennantPark Investment is expected to generate 0.92 times more return on investment than Hitachi Construction. However, PennantPark Investment is 1.08 times less risky than Hitachi Construction. It trades about 0.12 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about -0.01 per unit of risk. If you would invest 600.00 in PennantPark Investment on August 30, 2024 and sell it today you would earn a total of 58.00 from holding PennantPark Investment or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Hitachi Construction Machinery
Performance |
| Timeline |
| PennantPark Investment |
| Hitachi Construction |
PennantPark Investment and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Hitachi Construction
The main advantage of trading using opposite PennantPark Investment and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| PennantPark Investment vs. THAI BEVERAGE | PennantPark Investment vs. LG Display Co | PennantPark Investment vs. USWE SPORTS AB | PennantPark Investment vs. NISSIN FOODS HLDGS |
| Hitachi Construction vs. CNH Industrial NV | Hitachi Construction vs. Terex | Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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