Correlation Between PennantPark Investment and Elmos Semiconductor

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

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

Diversification Opportunities for PennantPark Investment and Elmos Semiconductor

0.53

Correlation Coefficient

PennantPark Investment  Elmos Semiconductor

Very weak diversification

The 3 months correlation between PennantPark and Elmos is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between PennantPark Investment and Elmos Semiconductor

Assuming the 90 days horizon PennantPark Investment is expected to generate 2.72 times less return on investment than Elmos Semiconductor. But when comparing it to its historical volatility, PennantPark Investment is 1.57 times less risky than Elmos Semiconductor. It trades about 0.12 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  6,275  in Elmos Semiconductor SE on May 7, 2025 and sell it today you would earn a total of  2,515  from holding Elmos Semiconductor SE or generate 40.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

PennantPark Investment  vs.  Elmos Semiconductor SE

PennantPark Investment

Risk-Adjusted Performance

Fair

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.

Elmos Semiconductor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Elmos Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennantPark Investment and Elmos Semiconductor

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

The idea behind PennantPark Investment and Elmos Semiconductor SE 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.