Correlation Between Transportadora and PennantPark Investment

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

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

Diversification Opportunities for Transportadora and PennantPark Investment

0.13

Correlation Coefficient

Transportadora  PennantPark Investment

Average diversification

The 3 months correlation between Transportadora and PennantPark is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and PennantPark Investment go up and down completely randomly.

Pair Corralation between Transportadora and PennantPark Investment

Assuming the 90 days trading horizon Transportadora is expected to generate 8.24 times less return on investment than PennantPark Investment. In addition to that, Transportadora is 2.59 times more volatile than PennantPark Investment. It trades about 0.01 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.12 per unit of volatility. If you would invest  547.00  in PennantPark Investment on April 25, 2025 and sell it today you would earn a total of  68.00  from holding PennantPark Investment or generate 12.43% return on investment over 90 days.

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

Transportadora de Gas  vs.  PennantPark Investment

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Transportadora is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PennantPark Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PennantPark Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and PennantPark Investment

The main advantage of trading using opposite Transportadora and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..