Correlation Between SLR Investment and SPORTING

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

Diversification Opportunities for SLR Investment and SPORTING

-0.29

Correlation Coefficient

SLR Investment  SPORTING

Very good diversification

The 3 months correlation between SLR and SPORTING is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of SLR Investment i.e., SLR Investment and SPORTING go up and down completely randomly.

Pair Corralation between SLR Investment and SPORTING

Assuming the 90 days horizon SLR Investment is expected to generate 4.8 times less return on investment than SPORTING. But when comparing it to its historical volatility, SLR Investment Corp is 2.06 times less risky than SPORTING. It trades about 0.06 of its potential returns per unit of risk. SPORTING is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  81.00  in SPORTING on December 29, 2024 and sell it today you would earn a total of  15.00  from holding SPORTING or generate 18.52% return on investment over 90 days.

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

SLR Investment Corp  vs.  SPORTING

SLR Investment Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 4 (%) 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.

SPORTING

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPORTING are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, SPORTING unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SLR Investment and SPORTING

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

The idea behind SLR Investment Corp and SPORTING 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.