Correlation Between Affiliated Resources and Logan Ridge

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

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

Diversification Opportunities for Affiliated Resources and Logan Ridge

-0.51

Correlation Coefficient

Affiliated Resources  Logan Ridge

Excellent diversification

The 3 months correlation between Affiliated and Logan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Resources Corp 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 Affiliated Resources 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 Affiliated Resources Corp 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 Affiliated Resources i.e., Affiliated Resources and Logan Ridge go up and down completely randomly.

Pair Corralation between Affiliated Resources and Logan Ridge

Given the investment horizon of 90 days Affiliated Resources Corp is expected to generate 12.26 times more return on investment than Logan Ridge. However, Affiliated Resources is 12.26 times more volatile than Logan Ridge Finance. It trades about 0.11 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.08 per unit of risk. If you would invest  1.10  in Affiliated Resources Corp on September 15, 2024 and sell it today you would earn a total of  7.40  from holding Affiliated Resources Corp or generate 672.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Affiliated Resources Corp  vs.  Logan Ridge Finance

Affiliated Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Affiliated Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Logan Ridge Finance

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal 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 Affiliated Resources and Logan Ridge

The main advantage of trading using opposite Affiliated Resources and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Resources 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 Affiliated Resources Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.