Correlation Between ANGLO ASIAN and PennantPark Investment

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

By analyzing existing cross correlation between ANGLO ASIAN MINING and PennantPark Investment, you can compare the effects of market volatilities on ANGLO ASIAN and PennantPark Investment 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 ANGLO ASIAN with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO ASIAN and PennantPark Investment.

Diversification Opportunities for ANGLO ASIAN and PennantPark Investment

-0.09

Correlation Coefficient

ANGLO ASIAN  PennantPark Investment

Good diversification

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

Pair Corralation between ANGLO ASIAN and PennantPark Investment

Assuming the 90 days trading horizon ANGLO ASIAN MINING is expected to generate 1.43 times more return on investment than PennantPark Investment. However, ANGLO ASIAN is 1.43 times more volatile than PennantPark Investment. It trades about 0.08 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.02 per unit of risk. If you would invest  127.00  in ANGLO ASIAN MINING on December 22, 2024 and sell it today you would earn a total of  15.00  from holding ANGLO ASIAN MINING or generate 11.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ANGLO ASIAN MINING  vs.  PennantPark Investment

ANGLO ASIAN MINING

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANGLO ASIAN MINING are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ANGLO ASIAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

PennantPark Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ANGLO ASIAN and PennantPark Investment

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

The idea behind ANGLO ASIAN MINING and PennantPark Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.