Correlation Between SLR Investment and ALGOMA STEEL

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

Diversification Opportunities for SLR Investment and ALGOMA STEEL

0.37

Correlation Coefficient

SLR Investment  ALGOMA STEEL

Weak diversification

The 3 months correlation between SLR and ALGOMA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of SLR Investment i.e., SLR Investment and ALGOMA STEEL go up and down completely randomly.

Pair Corralation between SLR Investment and ALGOMA STEEL

Assuming the 90 days horizon SLR Investment is expected to generate 3.65 times less return on investment than ALGOMA STEEL. But when comparing it to its historical volatility, SLR Investment Corp is 3.59 times less risky than ALGOMA STEEL. It trades about 0.17 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  412.00  in ALGOMA STEEL GROUP on April 21, 2025 and sell it today you would earn a total of  178.00  from holding ALGOMA STEEL GROUP or generate 43.2% return on investment over 90 days.

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

SLR Investment Corp  vs.  ALGOMA STEEL GROUP

SLR Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ALGOMA STEEL GROUP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALGOMA STEEL GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALGOMA STEEL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SLR Investment and ALGOMA STEEL

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

The idea behind SLR Investment Corp and ALGOMA STEEL GROUP 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.