Correlation Between Internet Thailand and PennyMac Financial

Can any of the company-specific risk be diversified away by investing in both Internet Thailand and PennyMac Financial 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 Internet Thailand and PennyMac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Internet Thailand PCL and PennyMac Financial Services, you can compare the effects of market volatilities on Internet Thailand and PennyMac Financial 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 Internet Thailand with a short position of PennyMac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Thailand and PennyMac Financial.

Diversification Opportunities for Internet Thailand and PennyMac Financial

0.21

Correlation Coefficient

Internet Thailand  PennyMac Financial

Modest diversification

The 3 months correlation between Internet and PennyMac is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Internet Thailand PCL and PennyMac Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Financial and Internet Thailand 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 Internet Thailand PCL are associated (or correlated) with PennyMac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Financial has no effect on the direction of Internet Thailand i.e., Internet Thailand and PennyMac Financial go up and down completely randomly.

Pair Corralation between Internet Thailand and PennyMac Financial

Assuming the 90 days trading horizon Internet Thailand PCL is expected to under-perform the PennyMac Financial. In addition to that, Internet Thailand is 2.51 times more volatile than PennyMac Financial Services. It trades about -0.15 of its total potential returns per unit of risk. PennyMac Financial Services is currently generating about 0.1 per unit of volatility. If you would invest  9,500  in PennyMac Financial Services on September 20, 2024 and sell it today you would earn a total of  350.00  from holding PennyMac Financial Services or generate 3.68% return on investment over 90 days.

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

Internet Thailand PCL  vs.  PennyMac Financial Services

Internet Thailand PCL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand PCL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Internet Thailand unveiled solid returns over the last few months and may actually be approaching a breakup point.

PennyMac Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Internet Thailand and PennyMac Financial

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

The idea behind Internet Thailand PCL and PennyMac Financial Services 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .