Correlation Between PPHE HOTEL and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and PennantPark Investment 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 PPHE HOTEL and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE HOTEL GROUP and PennantPark Investment, you can compare the effects of market volatilities on PPHE HOTEL and PennantPark Investment 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 PPHE HOTEL with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and PennantPark Investment.
Diversification Opportunities for PPHE HOTEL and PennantPark Investment
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PPHE and PennantPark is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and PPHE HOTEL 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 PPHE HOTEL GROUP are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and PennantPark Investment go up and down completely randomly.
Pair Corralation between PPHE HOTEL and PennantPark Investment
Assuming the 90 days trading horizon PPHE HOTEL is expected to generate 1.0 times less return on investment than PennantPark Investment. In addition to that, PPHE HOTEL is 1.19 times more volatile than PennantPark Investment. It trades about 0.08 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.1 per unit of volatility. If you would invest 617.00 in PennantPark Investment on October 30, 2024 and sell it today you would earn a total of 41.00 from holding PennantPark Investment or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. PennantPark Investment
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| PennantPark Investment |
PPHE HOTEL and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and PennantPark Investment
The main advantage of trading using opposite PPHE HOTEL and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| PPHE HOTEL vs. Spirent Communications plc | PPHE HOTEL vs. Align Technology | PPHE HOTEL vs. Vishay Intertechnology | PPHE HOTEL vs. Micron Technology |
| PennantPark Investment vs. Yuexiu Transport Infrastructure | PennantPark Investment vs. ECHO INVESTMENT ZY | PennantPark Investment vs. SEI INVESTMENTS | PennantPark Investment vs. MGIC 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 Stocks Directory module to find actively traded stocks across global markets.
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