Correlation Between Peel Mining and PennantPark Investment

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

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

Diversification Opportunities for Peel Mining and PennantPark Investment

0.58

Correlation Coefficient

Peel Mining  PennantPark Investment

Very weak diversification

The 3 months correlation between Peel and PennantPark is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining Limited and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Peel Mining 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 Peel Mining Limited 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 Peel Mining i.e., Peel Mining and PennantPark Investment go up and down completely randomly.

Pair Corralation between Peel Mining and PennantPark Investment

Assuming the 90 days horizon Peel Mining is expected to generate 2.13 times less return on investment than PennantPark Investment. In addition to that, Peel Mining is 1.01 times more volatile than PennantPark Investment. It trades about 0.14 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.3 per unit of volatility. If you would invest  636.00  in PennantPark Investment on October 9, 2024 and sell it today you would earn a total of  65.00  from holding PennantPark Investment or generate 10.22% return on investment over 90 days.

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

Peel Mining Limited  vs.  PennantPark Investment

Peel Mining Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peel Mining reported solid returns over the last few months and may actually be approaching a breakup point.

PennantPark Investment

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PennantPark Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peel Mining and PennantPark Investment

The main advantage of trading using opposite Peel Mining and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peel Mining 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 Peel Mining Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.