Correlation Between Logan Ridge and Topaz

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

Diversification Opportunities for Logan Ridge and Topaz

0.0

Correlation Coefficient

Logan Ridge  Topaz

Pay attention - limited upside

The 3 months correlation between Logan and Topaz is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Topaz Solar Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topaz Solar Farms 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 Topaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topaz Solar Farms has no effect on the direction of Logan Ridge i.e., Logan Ridge and Topaz go up and down completely randomly.

Pair Corralation between Logan Ridge and Topaz

If you would invest  2,366  in Logan Ridge Finance on September 15, 2024 and sell it today you would earn a total of  174.00  from holding Logan Ridge Finance or generate 7.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Logan Ridge Finance  vs.  Topaz Solar Farms

Logan Ridge Finance

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Logan Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Topaz Solar Farms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topaz Solar Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Topaz is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Logan Ridge and Topaz

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

The idea behind Logan Ridge Finance and Topaz Solar Farms 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.