Correlation Between SLR Investment and Advanced Medical

Can any of the company-specific risk be diversified away by investing in both SLR Investment and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on SLR Investment and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Advanced Medical.

Diversification Opportunities for SLR Investment and Advanced Medical

0.56

Correlation Coefficient

SLR Investment  Advanced Medical

Very weak diversification

The 3 months correlation between SLR and Advanced is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of SLR Investment i.e., SLR Investment and Advanced Medical go up and down completely randomly.

Pair Corralation between SLR Investment and Advanced Medical

Assuming the 90 days horizon SLR Investment is expected to generate 1.16 times less return on investment than Advanced Medical. But when comparing it to its historical volatility, SLR Investment Corp is 2.38 times less risky than Advanced Medical. It trades about 0.04 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  246.00  in Advanced Medical Solutions on December 21, 2024 and sell it today you would earn a total of  2.00  from holding Advanced Medical Solutions or generate 0.81% return on investment over 90 days.

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

SLR Investment Corp  vs.  Advanced Medical Solutions

SLR Investment Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SLR Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Advanced Medical Sol

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Advanced Medical 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 SLR Investment and Advanced Medical

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

The idea behind SLR Investment Corp and Advanced Medical Solutions 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.