Correlation Between SLR Investment and ORMAT TECHNOLOGIES

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

Diversification Opportunities for SLR Investment and ORMAT TECHNOLOGIES

0.29

Correlation Coefficient

SLR Investment  ORMAT TECHNOLOGIES

Modest diversification

The 3 months correlation between SLR and ORMAT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of SLR Investment i.e., SLR Investment and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between SLR Investment and ORMAT TECHNOLOGIES

Assuming the 90 days horizon SLR Investment Corp is expected to generate 0.75 times more return on investment than ORMAT TECHNOLOGIES. However, SLR Investment Corp is 1.34 times less risky than ORMAT TECHNOLOGIES. It trades about 0.06 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.02 per unit of risk. If you would invest  1,095  in SLR Investment Corp on October 4, 2024 and sell it today you would earn a total of  462.00  from holding SLR Investment Corp or generate 42.19% 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.  ORMAT TECHNOLOGIES

SLR Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ORMAT TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ORMAT TECHNOLOGIES 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 SLR Investment and ORMAT TECHNOLOGIES

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

The idea behind SLR Investment Corp and ORMAT TECHNOLOGIES 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.