Correlation Between SL Private and AdvancedAdvT

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

Diversification Opportunities for SL Private and AdvancedAdvT

-0.57

Correlation Coefficient

SL Private  AdvancedAdvT

Excellent diversification

The 3 months correlation between SLPE and AdvancedAdvT is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SL Private Equity and AdvancedAdvT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvancedAdvT 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 AdvancedAdvT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvancedAdvT has no effect on the direction of SL Private i.e., SL Private and AdvancedAdvT go up and down completely randomly.

Pair Corralation between SL Private and AdvancedAdvT

Assuming the 90 days trading horizon SL Private Equity is expected to under-perform the AdvancedAdvT. But the stock apears to be less risky and, when comparing its historical volatility, SL Private Equity is 1.92 times less risky than AdvancedAdvT. The stock trades about -0.03 of its potential returns per unit of risk. The AdvancedAdvT is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  15,000  in AdvancedAdvT on April 23, 2025 and sell it today you would earn a total of  3,250  from holding AdvancedAdvT or generate 21.67% 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.  AdvancedAdvT

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.

AdvancedAdvT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AdvancedAdvT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AdvancedAdvT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SL Private and AdvancedAdvT

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

The idea behind SL Private Equity and AdvancedAdvT 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 Global Correlations module to find global opportunities by holding instruments from different markets.