Correlation Between PennantPark Investment and Bright Scholar

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

By analyzing existing cross correlation between PennantPark Investment and Bright Scholar Education, you can compare the effects of market volatilities on PennantPark Investment and Bright Scholar 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 Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Bright Scholar.

Diversification Opportunities for PennantPark Investment and Bright Scholar

-0.06

Correlation Coefficient

PennantPark Investment  Bright Scholar

Good diversification

The 3 months correlation between PennantPark and Bright is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education 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 Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Bright Scholar go up and down completely randomly.

Pair Corralation between PennantPark Investment and Bright Scholar

Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.36 times more return on investment than Bright Scholar. However, PennantPark Investment is 2.79 times less risky than Bright Scholar. It trades about 0.03 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.0 per unit of risk. If you would invest  675.00  in PennantPark Investment on September 8, 2024 and sell it today you would earn a total of  11.00  from holding PennantPark Investment or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

PennantPark Investment  vs.  Bright Scholar Education

PennantPark Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 2 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Bright Scholar Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennantPark Investment and Bright Scholar

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

The idea behind PennantPark Investment and Bright Scholar Education 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.