Correlation Between Horizon Technology and Logan Ridge

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

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

Diversification Opportunities for Horizon Technology and Logan Ridge

-0.08

Correlation Coefficient

Horizon Technology  Logan Ridge

Good diversification

The 3 months correlation between Horizon and Logan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance 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 Horizon Technology 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 Horizon Technology Finance 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 Horizon Technology i.e., Horizon Technology and Logan Ridge go up and down completely randomly.

Pair Corralation between Horizon Technology and Logan Ridge

Given the investment horizon of 90 days Horizon Technology Finance is expected to generate 1.2 times more return on investment than Logan Ridge. However, Horizon Technology is 1.2 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 -0.12 per unit of risk. If you would invest  858.00  in Horizon Technology Finance on December 28, 2024 and sell it today you would earn a total of  72.00  from holding Horizon Technology Finance or generate 8.39% return on investment over 90 days.

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

Horizon Technology Finance  vs.  Logan Ridge Finance

Horizon Technology

Risk-Adjusted Performance

Modest

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

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Horizon Technology and Logan Ridge

The main advantage of trading using opposite Horizon Technology and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Technology 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 Horizon Technology Finance 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.