Correlation Between Logan Ridge and ESS Tech

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

Diversification Opportunities for Logan Ridge and ESS Tech

0.61

Correlation Coefficient

Logan Ridge  ESS Tech

Poor diversification

The 3 months correlation between Logan and ESS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and ESS Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESS Tech 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 ESS Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESS Tech has no effect on the direction of Logan Ridge i.e., Logan Ridge and ESS Tech go up and down completely randomly.

Pair Corralation between Logan Ridge and ESS Tech

Given the investment horizon of 90 days Logan Ridge is expected to generate 5.43 times less return on investment than ESS Tech. But when comparing it to its historical volatility, Logan Ridge Finance is 9.28 times less risky than ESS Tech. It trades about 0.09 of its potential returns per unit of risk. ESS Tech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  208.00  in ESS Tech on May 4, 2025 and sell it today you would lose (37.00) from holding ESS Tech or give up 17.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.26%
Values	Daily Returns

Logan Ridge Finance  vs.  ESS Tech

Logan Ridge Finance

Risk-Adjusted Performance

OK

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 rather weak technical and fundamental indicators, Logan Ridge may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ESS Tech

Risk-Adjusted Performance

Insignificant

Over the last 90 days ESS Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, ESS Tech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logan Ridge and ESS Tech

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

The idea behind Logan Ridge Finance and ESS Tech 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.