Correlation Between Todos Medical and PennantPark Investment

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

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

Diversification Opportunities for Todos Medical and PennantPark Investment

0.0

Correlation Coefficient

Todos Medical  PennantPark Investment

Pay attention - limited upside

The 3 months correlation between Todos and PennantPark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Todos Medical and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Todos Medical 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 Todos Medical 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 Todos Medical i.e., Todos Medical and PennantPark Investment go up and down completely randomly.

Pair Corralation between Todos Medical and PennantPark Investment

Assuming the 90 days horizon Todos Medical is expected to generate 54.49 times more return on investment than PennantPark Investment. However, Todos Medical is 54.49 times more volatile than PennantPark Investment. It trades about 0.05 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.08 per unit of risk. If you would invest  0.05  in Todos Medical on September 26, 2024 and sell it today you would lose (0.05) from holding Todos Medical or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Todos Medical  vs.  PennantPark Investment

Todos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Todos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Todos Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PennantPark Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 7 (%) 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.

Pair Trading with Todos Medical and PennantPark Investment

The main advantage of trading using opposite Todos Medical and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Todos Medical 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 Todos Medical 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.