Correlation Between PureTech Health and SL Private

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

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

Diversification Opportunities for PureTech Health and SL Private

0.1

Correlation Coefficient

PureTech Health  SL Private

Average diversification

The 3 months correlation between PureTech and SLPE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and SL Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Private Equity and PureTech Health 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 PureTech Health plc are associated (or correlated) with SL Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Private Equity has no effect on the direction of PureTech Health i.e., PureTech Health and SL Private go up and down completely randomly.

Pair Corralation between PureTech Health and SL Private

Assuming the 90 days trading horizon PureTech Health plc is expected to generate 2.5 times more return on investment than SL Private. However, PureTech Health is 2.5 times more volatile than SL Private Equity. It trades about 0.03 of its potential returns per unit of risk. SL Private Equity is currently generating about 0.05 per unit of risk. If you would invest  15,040  in PureTech Health plc on September 26, 2024 and sell it today you would earn a total of  440.00  from holding PureTech Health plc or generate 2.93% return on investment over 90 days.

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

PureTech Health plc  vs.  SL Private Equity

PureTech Health plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SL Private Equity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SL Private Equity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with PureTech Health and SL Private

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

The idea behind PureTech Health plc and SL Private Equity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.