Correlation Between Boston Beer and Lery Seafood

Can any of the company-specific risk be diversified away by investing in both Boston Beer and Lery Seafood 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 Boston Beer and Lery Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boston Beer and Lery Seafood Group, you can compare the effects of market volatilities on Boston Beer and Lery Seafood 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 Boston Beer with a short position of Lery Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Lery Seafood.

Diversification Opportunities for Boston Beer and Lery Seafood

-0.03

Correlation Coefficient

Boston Beer  Lery Seafood

Good diversification

The 3 months correlation between Boston and Lery is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group and Boston Beer 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 The Boston Beer are associated (or correlated) with Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Boston Beer i.e., Boston Beer and Lery Seafood go up and down completely randomly.

Pair Corralation between Boston Beer and Lery Seafood

Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the Lery Seafood. But the stock apears to be less risky and, when comparing its historical volatility, The Boston Beer is 1.05 times less risky than Lery Seafood. The stock trades about -0.11 of its potential returns per unit of risk. The Lery Seafood Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  441.00  in Lery Seafood Group on October 25, 2024 and sell it today you would earn a total of  2.00  from holding Lery Seafood Group or generate 0.45% return on investment over 90 days.

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

The Boston Beer  vs.  Lery Seafood Group

Boston Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Lery Seafood Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lery Seafood Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lery Seafood is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boston Beer and Lery Seafood

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

The idea behind The Boston Beer and Lery Seafood Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.