Correlation Between PennantPark Investment and Keck Seng

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

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

Diversification Opportunities for PennantPark Investment and Keck Seng

0.24

Correlation Coefficient

PennantPark Investment  Keck Seng

Modest diversification

The 3 months correlation between PennantPark and Keck is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Keck Seng Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Investments 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 Keck Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keck Seng Investments has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Keck Seng go up and down completely randomly.

Pair Corralation between PennantPark Investment and Keck Seng

Assuming the 90 days horizon PennantPark Investment is expected to generate 27.02 times less return on investment than Keck Seng. But when comparing it to its historical volatility, PennantPark Investment is 2.45 times less risky than Keck Seng. It trades about 0.01 of its potential returns per unit of risk. Keck Seng Investments is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Keck Seng Investments on December 21, 2024 and sell it today you would earn a total of  3.00  from holding Keck Seng Investments or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PennantPark Investment  vs.  Keck Seng Investments

PennantPark Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days PennantPark Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Keck Seng Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keck Seng Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keck Seng reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Investment and Keck Seng

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

The idea behind PennantPark Investment and Keck Seng Investments 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.