Correlation Between SLR Investment and Sanyo Chemical

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

Diversification Opportunities for SLR Investment and Sanyo Chemical

-0.54

Correlation Coefficient

SLR Investment  Sanyo Chemical

Excellent diversification

The 3 months correlation between SLR and Sanyo is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of SLR Investment i.e., SLR Investment and Sanyo Chemical go up and down completely randomly.

Pair Corralation between SLR Investment and Sanyo Chemical

Assuming the 90 days horizon SLR Investment Corp is expected to under-perform the Sanyo Chemical. But the stock apears to be less risky and, when comparing its historical volatility, SLR Investment Corp is 1.02 times less risky than Sanyo Chemical. The stock trades about -0.02 of its potential returns per unit of risk. The Sanyo Chemical Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Sanyo Chemical Industries on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Sanyo Chemical Industries or generate 0.0% return on investment over 90 days.

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

SLR Investment Corp  vs.  Sanyo Chemical Industries

SLR Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Sanyo Chemical Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SLR Investment and Sanyo Chemical

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

The idea behind SLR Investment Corp and Sanyo Chemical Industries 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.