Correlation Between Konica Minolta and PennantPark Investment

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

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

Diversification Opportunities for Konica Minolta and PennantPark Investment

0.07

Correlation Coefficient

Konica Minolta  PennantPark Investment

Significant diversification

The 3 months correlation between Konica and PennantPark is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Konica Minolta and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Konica Minolta 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 Konica Minolta 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 Konica Minolta i.e., Konica Minolta and PennantPark Investment go up and down completely randomly.

Pair Corralation between Konica Minolta and PennantPark Investment

Assuming the 90 days horizon Konica Minolta is expected to generate 2.98 times more return on investment than PennantPark Investment. However, Konica Minolta is 2.98 times more volatile than PennantPark Investment. It trades about 0.05 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.06 per unit of risk. If you would invest  306.00  in Konica Minolta on October 9, 2024 and sell it today you would earn a total of  75.00  from holding Konica Minolta or generate 24.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.43%
Values	Daily Returns

Konica Minolta  vs.  PennantPark Investment

Konica Minolta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Konica Minolta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Konica Minolta reported solid returns over the last few months and may actually be approaching a breakup point.

PennantPark Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Konica Minolta and PennantPark Investment

The main advantage of trading using opposite Konica Minolta and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Konica Minolta 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 Konica Minolta 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.