Correlation Between PennantPark Investment and KSB SE

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

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

Diversification Opportunities for PennantPark Investment and KSB SE

0.09

Correlation Coefficient

PennantPark Investment  KSB SE

Significant diversification

The 3 months correlation between PennantPark and KSB is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and KSB SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB SE 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 KSB SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB SE has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and KSB SE go up and down completely randomly.

Pair Corralation between PennantPark Investment and KSB SE

Assuming the 90 days horizon PennantPark Investment is expected to generate 1.03 times less return on investment than KSB SE. In addition to that, PennantPark Investment is 1.29 times more volatile than KSB SE Co. It trades about 0.06 of its total potential returns per unit of risk. KSB SE Co is currently generating about 0.08 per unit of volatility. If you would invest  34,255  in KSB SE Co on October 11, 2024 and sell it today you would earn a total of  25,745  from holding KSB SE Co or generate 75.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

PennantPark Investment  vs.  KSB SE Co

PennantPark Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 7 (%) 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.

KSB SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennantPark Investment and KSB SE

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

The idea behind PennantPark Investment and KSB SE Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.