Correlation Between Logan Ridge and Carters

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

Diversification Opportunities for Logan Ridge and Carters

-0.75

Correlation Coefficient

Logan Ridge  Carters

Pay attention - limited upside

The 3 months correlation between Logan and Carters is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters 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 Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Logan Ridge i.e., Logan Ridge and Carters go up and down completely randomly.

Pair Corralation between Logan Ridge and Carters

Given the investment horizon of 90 days Logan Ridge Finance is expected to under-perform the Carters. But the stock apears to be less risky and, when comparing its historical volatility, Logan Ridge Finance is 1.32 times less risky than Carters. The stock trades about -0.13 of its potential returns per unit of risk. The Carters is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,528  in Carters on September 25, 2024 and sell it today you would lose (46.00) from holding Carters or give up 0.83% of portfolio value over 90 days.

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

Logan Ridge Finance  vs.  Carters

Logan Ridge Finance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Logan Ridge and Carters

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

The idea behind Logan Ridge Finance and Carters 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.