Correlation Between PennantPark Investment and AKITA Drilling

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

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

Diversification Opportunities for PennantPark Investment and AKITA Drilling

0.3

Correlation Coefficient

PennantPark Investment  AKITA Drilling

Weak diversification

The 3 months correlation between PennantPark and AKITA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and PennantPark Investment 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 Investment are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and AKITA Drilling go up and down completely randomly.

Pair Corralation between PennantPark Investment and AKITA Drilling

Given the investment horizon of 90 days PennantPark Investment is expected to generate 23.97 times less return on investment than AKITA Drilling. But when comparing it to its historical volatility, PennantPark Investment is 1.91 times less risky than AKITA Drilling. It trades about 0.01 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  98.00  in AKITA Drilling on September 24, 2024 and sell it today you would earn a total of  17.00  from holding AKITA Drilling or generate 17.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

PennantPark Investment  vs.  AKITA Drilling

PennantPark Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 4 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

AKITA Drilling

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AKITA Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PennantPark Investment and AKITA Drilling

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

The idea behind PennantPark Investment and AKITA Drilling 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.