Correlation Between Logan Ridge and Above Food

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

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

Diversification Opportunities for Logan Ridge and Above Food

-0.09

Correlation Coefficient

Logan Ridge  Above Food

Good diversification

The 3 months correlation between Logan and Above is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients and Logan Ridge 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 Logan Ridge Finance are associated (or correlated) with Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Logan Ridge i.e., Logan Ridge and Above Food go up and down completely randomly.

Pair Corralation between Logan Ridge and Above Food

Given the investment horizon of 90 days Logan Ridge Finance is expected to under-perform the Above Food. But the stock apears to be less risky and, when comparing its historical volatility, Logan Ridge Finance is 14.87 times less risky than Above Food. The stock trades about -0.23 of its potential returns per unit of risk. The Above Food Ingredients is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.88  in Above Food Ingredients on December 4, 2024 and sell it today you would earn a total of  0.21  from holding Above Food Ingredients or generate 7.29% return on investment over 90 days.

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

Logan Ridge Finance  vs.  Above Food Ingredients

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 rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Above Food Ingredients

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Above Food Ingredients are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Above Food showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logan Ridge and Above Food

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

The idea behind Logan Ridge Finance and Above Food Ingredients 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.