Correlation Between Above Food and Logan Ridge

Can any of the company-specific risk be diversified away by investing in both Above Food and Logan Ridge 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 Above Food and Logan Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Above Food Ingredients and Logan Ridge Finance, you can compare the effects of market volatilities on Above Food and Logan Ridge 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 Above Food with a short position of Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Above Food and Logan Ridge.

Diversification Opportunities for Above Food and Logan Ridge

0.21

Correlation Coefficient

Above Food  Logan Ridge

Modest diversification

The 3 months correlation between Above and Logan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Above Food Ingredients and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance and Above Food 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 Above Food Ingredients are associated (or correlated) with Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Above Food i.e., Above Food and Logan Ridge go up and down completely randomly.

Pair Corralation between Above Food and Logan Ridge

Assuming the 90 days horizon Above Food Ingredients is expected to generate 20.3 times more return on investment than Logan Ridge. However, Above Food is 20.3 times more volatile than Logan Ridge Finance. It trades about 0.09 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.02 per unit of risk. If you would invest  2.23  in Above Food Ingredients on September 13, 2024 and sell it today you would lose (0.21) from holding Above Food Ingredients or give up 9.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Above Food Ingredients  vs.  Logan Ridge Finance

Above Food Ingredients

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Above Food Ingredients are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Above Food showed solid returns over the last few months and may actually be approaching a breakup point.

Logan Ridge Finance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Logan Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Above Food and Logan Ridge

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

The idea behind Above Food Ingredients and Logan Ridge Finance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.