Correlation Between PEPKOR and PennantPark Investment

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Can any of the company-specific risk be diversified away by investing in both PEPKOR 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 PEPKOR and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and PennantPark Investment, you can compare the effects of market volatilities on PEPKOR 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 PEPKOR with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and PennantPark Investment.

Diversification Opportunities for PEPKOR and PennantPark Investment

PEPKORPennantParkDiversified AwayPEPKORPennantParkDiversified Away100%
0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between PEPKOR and PennantPark is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and PEPKOR 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 PEPKOR LTD 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 PEPKOR i.e., PEPKOR and PennantPark Investment go up and down completely randomly.

Pair Corralation between PEPKOR and PennantPark Investment

Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 1.19 times more return on investment than PennantPark Investment. However, PEPKOR is 1.19 times more volatile than PennantPark Investment. It trades about 0.04 of its potential returns per unit of risk. PennantPark Investment is currently generating about -0.05 per unit of risk. If you would invest  134.00  in PEPKOR LTD on November 18, 2024 and sell it today you would earn a total of  2.00  from holding PEPKOR LTD or generate 1.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

PEPKOR LTD  vs.  PennantPark Investment

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 020406080
JavaScript chart by amCharts 3.21.15S1VA 12P
       Timeline  
PEPKOR LTD 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PEPKOR LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PEPKOR reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.70.80.911.11.21.3
PennantPark Investment 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.26.36.46.56.66.76.86.97

PEPKOR and PennantPark Investment Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-23.44-17.56-11.67-5.790.06.0412.418.7625.1231.49 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15S1VA 12P
       Returns  

Pair Trading with PEPKOR and PennantPark Investment

The main advantage of trading using opposite PEPKOR and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR 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 PEPKOR LTD 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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