Correlation Between Logan Ridge and Century Financial

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

Diversification Opportunities for Logan Ridge and Century Financial

0.64

Correlation Coefficient

Logan Ridge  Century Financial

Poor diversification

The 3 months correlation between Logan and Century is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Century Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Financial 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 Century Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Financial Corp has no effect on the direction of Logan Ridge i.e., Logan Ridge and Century Financial go up and down completely randomly.

Pair Corralation between Logan Ridge and Century Financial

Given the investment horizon of 90 days Logan Ridge Finance is expected to generate 1.24 times more return on investment than Century Financial. However, Logan Ridge is 1.24 times more volatile than Century Financial Corp. It trades about 0.14 of its potential returns per unit of risk. Century Financial Corp is currently generating about 0.15 per unit of risk. If you would invest  2,114  in Logan Ridge Finance on September 5, 2024 and sell it today you would earn a total of  367.00  from holding Logan Ridge Finance or generate 17.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Logan Ridge Finance  vs.  Century Financial Corp

Logan Ridge Finance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Logan Ridge exhibited solid returns over the last few months and may actually be approaching a breakup point.

Century Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Century Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logan Ridge and Century Financial

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

The idea behind Logan Ridge Finance and Century Financial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.