Correlation Between Logan Ridge and SK Growth

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

Diversification Opportunities for Logan Ridge and SK Growth

0.64

Correlation Coefficient

Logan Ridge  SK Growth

Poor diversification

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

Pair Corralation between Logan Ridge and SK Growth

Given the investment horizon of 90 days Logan Ridge Finance is expected to generate 2.67 times more return on investment than SK Growth. However, Logan Ridge is 2.67 times more volatile than SK Growth Opportunities. It trades about 0.04 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.06 per unit of risk. If you would invest  2,023  in Logan Ridge Finance on October 7, 2024 and sell it today you would earn a total of  455.00  from holding Logan Ridge Finance or generate 22.49% return on investment over 90 days.

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

Logan Ridge Finance  vs.  SK Growth Opportunities

Logan Ridge Finance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 5 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

SK Growth Opportunities

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Logan Ridge and SK Growth

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

The idea behind Logan Ridge Finance and SK Growth Opportunities 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.