Correlation Between PennantPark Investment and AUSTEVOLL SEAFOOD

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

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

Diversification Opportunities for PennantPark Investment and AUSTEVOLL SEAFOOD

0.29

Correlation Coefficient

PennantPark Investment  AUSTEVOLL SEAFOOD

Modest diversification

The 3 months correlation between PennantPark and AUSTEVOLL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSTEVOLL SEAFOOD has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and AUSTEVOLL SEAFOOD go up and down completely randomly.

Pair Corralation between PennantPark Investment and AUSTEVOLL SEAFOOD

Assuming the 90 days horizon PennantPark Investment is expected to generate 4.73 times less return on investment than AUSTEVOLL SEAFOOD. But when comparing it to its historical volatility, PennantPark Investment is 4.07 times less risky than AUSTEVOLL SEAFOOD. It trades about 0.06 of its potential returns per unit of risk. AUSTEVOLL SEAFOOD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  286.00  in AUSTEVOLL SEAFOOD on October 5, 2024 and sell it today you would earn a total of  533.00  from holding AUSTEVOLL SEAFOOD or generate 186.36% 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.  AUSTEVOLL SEAFOOD

PennantPark Investment

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days PennantPark Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUSTEVOLL SEAFOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD

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

The idea behind PennantPark Investment and AUSTEVOLL SEAFOOD 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.