Correlation Between Logan Ridge and Affiliated Resources

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

Diversification Opportunities for Logan Ridge and Affiliated Resources

-0.51

Correlation Coefficient

Logan Ridge  Affiliated Resources

Excellent diversification

The 3 months correlation between Logan and Affiliated is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp 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 Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Logan Ridge i.e., Logan Ridge and Affiliated Resources go up and down completely randomly.

Pair Corralation between Logan Ridge and Affiliated Resources

Given the investment horizon of 90 days Logan Ridge Finance is expected to generate 0.2 times more return on investment than Affiliated Resources. However, Logan Ridge Finance is 4.9 times less risky than Affiliated Resources. It trades about 0.09 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about -0.01 per unit of risk. If you would invest  2,366  in Logan Ridge Finance on September 15, 2024 and sell it today you would earn a total of  174.00  from holding Logan Ridge Finance or generate 7.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Logan Ridge Finance  vs.  Affiliated Resources Corp

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.

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.

Pair Trading with Logan Ridge and Affiliated Resources

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

The idea behind Logan Ridge Finance and Affiliated Resources Corp 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.