Correlation Between SLR Investment and AOYAMA TRADING

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

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

Diversification Opportunities for SLR Investment and AOYAMA TRADING

0.93

Correlation Coefficient

SLR Investment  AOYAMA TRADING

Almost no diversification

The 3 months correlation between SLR and AOYAMA is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING and SLR 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 SLR Investment Corp are associated (or correlated) with AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of SLR Investment i.e., SLR Investment and AOYAMA TRADING go up and down completely randomly.

Pair Corralation between SLR Investment and AOYAMA TRADING

Assuming the 90 days horizon SLR Investment Corp is expected to generate 1.01 times more return on investment than AOYAMA TRADING. However, SLR Investment is 1.01 times more volatile than AOYAMA TRADING. It trades about 0.15 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.01 per unit of risk. If you would invest  1,536  in SLR Investment Corp on October 7, 2024 and sell it today you would earn a total of  50.00  from holding SLR Investment Corp or generate 3.26% return on investment over 90 days.

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

SLR Investment Corp  vs.  AOYAMA TRADING

SLR Investment Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.

AOYAMA TRADING

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SLR Investment and AOYAMA TRADING

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

The idea behind SLR Investment Corp and AOYAMA TRADING 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.