Correlation Between Logan Ridge and GreenBank Capital

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

Diversification Opportunities for Logan Ridge and GreenBank Capital

-0.45

Correlation Coefficient

Logan Ridge  GreenBank Capital

Very good diversification

The 3 months correlation between Logan and GreenBank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and GreenBank Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenBank Capital 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 GreenBank Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenBank Capital has no effect on the direction of Logan Ridge i.e., Logan Ridge and GreenBank Capital go up and down completely randomly.

Pair Corralation between Logan Ridge and GreenBank Capital

Given the investment horizon of 90 days Logan Ridge is expected to generate 2.53 times less return on investment than GreenBank Capital. But when comparing it to its historical volatility, Logan Ridge Finance is 8.61 times less risky than GreenBank Capital. It trades about 0.14 of its potential returns per unit of risk. GreenBank Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.21  in GreenBank Capital on September 5, 2024 and sell it today you would lose (0.34) from holding GreenBank Capital or give up 28.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Logan Ridge Finance  vs.  GreenBank Capital

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.

GreenBank Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GreenBank Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, GreenBank Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logan Ridge and GreenBank Capital

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

The idea behind Logan Ridge Finance and GreenBank Capital 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.