Correlation Between Logan Ridge and Princeton Capital

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

Diversification Opportunities for Logan Ridge and Princeton Capital

0.34

Correlation Coefficient

Logan Ridge  Princeton Capital

Weak diversification

The 3 months correlation between Logan and Princeton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton 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 Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of Logan Ridge i.e., Logan Ridge and Princeton Capital go up and down completely randomly.

Pair Corralation between Logan Ridge and Princeton Capital

Given the investment horizon of 90 days Logan Ridge Finance is expected to under-perform the Princeton Capital. But the stock apears to be less risky and, when comparing its historical volatility, Logan Ridge Finance is 4.46 times less risky than Princeton Capital. The stock trades about -0.12 of its potential returns per unit of risk. The Princeton Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Princeton Capital on December 29, 2024 and sell it today you would lose (1.00) from holding Princeton Capital or give up 8.33% of portfolio value over 90 days.

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

Logan Ridge Finance  vs.  Princeton Capital

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 latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Princeton Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Princeton Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Princeton Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Logan Ridge and Princeton Capital

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

The idea behind Logan Ridge Finance and Princeton 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.