Correlation Between PennantPark Floating and SK Growth

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and SK Growth 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 SK Growth 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 SK Growth Opportunities, you can compare the effects of market volatilities on PennantPark Floating and SK Growth 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 SK Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and SK Growth.

Diversification Opportunities for PennantPark Floating and SK Growth

-0.58

Correlation Coefficient

PennantPark Floating  SK Growth

Excellent diversification

The 3 months correlation between PennantPark and SKGR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities 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 SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and SK Growth go up and down completely randomly.

Pair Corralation between PennantPark Floating and SK Growth

Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 3.14 times more return on investment than SK Growth. However, PennantPark Floating is 3.14 times more volatile than SK Growth Opportunities. It trades about 0.12 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.13 per unit of risk. If you would invest  1,084  in PennantPark Floating Rate on October 22, 2024 and sell it today you would earn a total of  33.00  from holding PennantPark Floating Rate or generate 3.04% return on investment over 90 days.

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

PennantPark Floating Rate  vs.  SK Growth Opportunities

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

SK Growth Opportunities

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PennantPark Floating and SK Growth

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

The idea behind PennantPark Floating Rate and SK Growth Opportunities 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.