Correlation Between SL Private and Croda International

Can any of the company-specific risk be diversified away by investing in both SL Private and Croda International 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 SL Private and Croda International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Private Equity and Croda International Plc, you can compare the effects of market volatilities on SL Private and Croda International 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 SL Private with a short position of Croda International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Private and Croda International.

Diversification Opportunities for SL Private and Croda International

-0.43

Correlation Coefficient

SL Private  Croda International

Very good diversification

The 3 months correlation between SLPE and Croda is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SL Private Equity and Croda International Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croda International Plc and SL Private 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 SL Private Equity are associated (or correlated) with Croda International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croda International Plc has no effect on the direction of SL Private i.e., SL Private and Croda International go up and down completely randomly.

Pair Corralation between SL Private and Croda International

Assuming the 90 days trading horizon SL Private Equity is expected to under-perform the Croda International. But the stock apears to be less risky and, when comparing its historical volatility, SL Private Equity is 131.71 times less risky than Croda International. The stock trades about -0.05 of its potential returns per unit of risk. The Croda International Plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Croda International Plc on April 20, 2025 and sell it today you would earn a total of  8,667  from holding Croda International Plc or generate 10442.17% return on investment over 90 days.

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

SL Private Equity  vs.  Croda International Plc

SL Private Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days SL Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SL Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Croda International Plc

Risk-Adjusted Performance

OK

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

Pair Trading with SL Private and Croda International

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

The idea behind SL Private Equity and Croda International Plc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.