Correlation Between East Africa and Logan Ridge
Can any of the company-specific risk be diversified away by investing in both East Africa 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 East Africa and Logan Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Logan Ridge Finance, you can compare the effects of market volatilities on East Africa 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 East Africa with a short position of Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Logan Ridge.
Diversification Opportunities for East Africa and Logan Ridge
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between East and Logan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals 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 East Africa 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 East Africa Metals 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 East Africa i.e., East Africa and Logan Ridge go up and down completely randomly.
Pair Corralation between East Africa and Logan Ridge
Assuming the 90 days horizon East Africa Metals is expected to generate 43.29 times more return on investment than Logan Ridge. However, East Africa is 43.29 times more volatile than Logan Ridge Finance. It trades about 0.08 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.09 per unit of risk. If you would invest 1.10 in East Africa Metals on September 1, 2024 and sell it today you would earn a total of 9.90 from holding East Africa Metals or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
East Africa Metals vs. Logan Ridge Finance
Performance |
| Timeline |
| East Africa Metals |
| Logan Ridge Finance |
East Africa and Logan Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Logan Ridge
The main advantage of trading using opposite East Africa and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa 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.| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
| Logan Ridge vs. Badger Infrastructure Solutions | Logan Ridge vs. Portman Ridge Finance | Logan Ridge vs. Inotiv Inc | Logan Ridge vs. Phenixfin |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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