Correlation Between PennantPark Investment and Jenoptik

Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Jenoptik 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 Jenoptik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennantPark Investment and Jenoptik AG, you can compare the effects of market volatilities on PennantPark Investment and Jenoptik 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 Jenoptik. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Jenoptik.

Diversification Opportunities for PennantPark Investment and Jenoptik

0.2

Correlation Coefficient

PennantPark Investment  Jenoptik

Modest diversification

The 3 months correlation between PennantPark and Jenoptik is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Jenoptik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenoptik AG 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 Jenoptik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenoptik AG has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Jenoptik go up and down completely randomly.

Pair Corralation between PennantPark Investment and Jenoptik

Assuming the 90 days horizon PennantPark Investment is expected to generate 1.09 times more return on investment than Jenoptik. However, PennantPark Investment is 1.09 times more volatile than Jenoptik AG. It trades about 0.06 of its potential returns per unit of risk. Jenoptik AG is currently generating about -0.05 per unit of risk. If you would invest  621.00  in PennantPark Investment on October 26, 2024 and sell it today you would earn a total of  37.00  from holding PennantPark Investment or generate 5.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

PennantPark Investment  vs.  Jenoptik AG

PennantPark Investment

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jenoptik AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jenoptik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Jenoptik is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PennantPark Investment and Jenoptik

The main advantage of trading using opposite PennantPark Investment and Jenoptik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Jenoptik 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 Jenoptik will offset losses from the drop in Jenoptik's long position.

The idea behind PennantPark Investment and Jenoptik AG 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.