Correlation Between Zhihu and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Zhihu and PennantPark Floating 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 Zhihu and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhihu Inc ADR and PennantPark Floating Rate, you can compare the effects of market volatilities on Zhihu and PennantPark Floating 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 Zhihu with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and PennantPark Floating.
Diversification Opportunities for Zhihu and PennantPark Floating
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zhihu and PennantPark is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Zhihu 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 Zhihu Inc ADR are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Zhihu i.e., Zhihu and PennantPark Floating go up and down completely randomly.
Pair Corralation between Zhihu and PennantPark Floating
Allowing for the 90-day total investment horizon Zhihu Inc ADR is expected to under-perform the PennantPark Floating. In addition to that, Zhihu is 3.24 times more volatile than PennantPark Floating Rate. It trades about -0.01 of its total potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.04 per unit of volatility. If you would invest 915.00 in PennantPark Floating Rate on August 30, 2024 and sell it today you would earn a total of 192.00 from holding PennantPark Floating Rate or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhihu Inc ADR vs. PennantPark Floating Rate
Performance |
| Timeline |
| Zhihu Inc ADR |
| PennantPark Floating Rate |
Zhihu and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and PennantPark Floating
The main advantage of trading using opposite Zhihu and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu position performs unexpectedly, PennantPark Floating 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 Floating will offset losses from the drop in PennantPark Floating's long position.The idea behind Zhihu Inc ADR and PennantPark Floating Rate 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.| PennantPark Floating vs. TPG Inc | PennantPark Floating vs. Carlyle Secured Lending | PennantPark Floating vs. Brookfield Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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