Correlation Between PennantPark Floating and Cementos Pacasmayo

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

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

Diversification Opportunities for PennantPark Floating and Cementos Pacasmayo

-0.65

Correlation Coefficient

PennantPark Floating  Cementos Pacasmayo

Excellent diversification

The 3 months correlation between PennantPark and Cementos is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Cementos Pacasmayo SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cementos Pacasmayo SAA and PennantPark Floating 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 Floating Rate are associated (or correlated) with Cementos Pacasmayo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cementos Pacasmayo SAA has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Cementos Pacasmayo go up and down completely randomly.

Pair Corralation between PennantPark Floating and Cementos Pacasmayo

Given the investment horizon of 90 days PennantPark Floating is expected to generate 1.3 times less return on investment than Cementos Pacasmayo. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.2 times less risky than Cementos Pacasmayo. It trades about 0.03 of its potential returns per unit of risk. Cementos Pacasmayo SAA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  438.00  in Cementos Pacasmayo SAA on September 29, 2024 and sell it today you would earn a total of  97.00  from holding Cementos Pacasmayo SAA or generate 22.15% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  Cementos Pacasmayo SAA

PennantPark Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennantPark Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, PennantPark Floating is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Cementos Pacasmayo SAA

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with PennantPark Floating and Cementos Pacasmayo

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

The idea behind PennantPark Floating Rate and Cementos Pacasmayo SAA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.