Correlation Between Four Seasons and Logan Ridge

Can any of the company-specific risk be diversified away by investing in both Four Seasons and Logan Ridge 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 Four Seasons and Logan Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Four Seasons Education and Logan Ridge Finance, you can compare the effects of market volatilities on Four Seasons and Logan Ridge 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 Four Seasons with a short position of Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Logan Ridge.

Diversification Opportunities for Four Seasons and Logan Ridge

-0.36

Correlation Coefficient

Four Seasons  Logan Ridge

Very good diversification

The 3 months correlation between Four and Logan is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance and Four Seasons 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 Four Seasons Education are associated (or correlated) with Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Four Seasons i.e., Four Seasons and Logan Ridge go up and down completely randomly.

Pair Corralation between Four Seasons and Logan Ridge

Given the investment horizon of 90 days Four Seasons Education is expected to generate 43.75 times more return on investment than Logan Ridge. However, Four Seasons is 43.75 times more volatile than Logan Ridge Finance. It trades about 0.05 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.04 per unit of risk. If you would invest  646.00  in Four Seasons Education on September 20, 2024 and sell it today you would earn a total of  483.00  from holding Four Seasons Education or generate 74.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.03%
Values	Daily Returns

Four Seasons Education  vs.  Logan Ridge Finance

Four Seasons Education

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Four Seasons unveiled solid returns over the last few months and may actually be approaching a breakup point.

Logan Ridge Finance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 1 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Four Seasons and Logan Ridge

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

The idea behind Four Seasons Education and Logan Ridge Finance 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.