Correlation Between Hurco Companies and PennantPark Investment

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

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

Diversification Opportunities for Hurco Companies and PennantPark Investment

0.12

Correlation Coefficient

Hurco Companies  PennantPark Investment

Average diversification

The 3 months correlation between Hurco and PennantPark is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Hurco Companies 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 Hurco Companies 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 Hurco Companies i.e., Hurco Companies and PennantPark Investment go up and down completely randomly.

Pair Corralation between Hurco Companies and PennantPark Investment

Given the investment horizon of 90 days Hurco Companies is expected to generate 2.88 times more return on investment than PennantPark Investment. However, Hurco Companies is 2.88 times more volatile than PennantPark Investment. It trades about 0.02 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.03 per unit of risk. If you would invest  1,874  in Hurco Companies on September 19, 2024 and sell it today you would earn a total of  36.00  from holding Hurco Companies or generate 1.92% return on investment over 90 days.

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

Hurco Companies  vs.  PennantPark Investment

Hurco Companies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hurco Companies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PennantPark Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hurco Companies and PennantPark Investment

The main advantage of trading using opposite Hurco Companies and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hurco Companies 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 Hurco Companies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.