Correlation Between Clean Seas and Lery Seafood

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

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

Diversification Opportunities for Clean Seas and Lery Seafood

-0.63

Correlation Coefficient

Clean Seas  Lery Seafood

Excellent diversification

The 3 months correlation between Clean and Lery is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood 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 Clean Seas 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 Clean Seas Seafood 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 Clean Seas i.e., Clean Seas and Lery Seafood go up and down completely randomly.

Pair Corralation between Clean Seas and Lery Seafood

Assuming the 90 days trading horizon Clean Seas Seafood is expected to under-perform the Lery Seafood. In addition to that, Clean Seas is 2.89 times more volatile than Lery Seafood Group. It trades about -0.26 of its total potential returns per unit of risk. Lery Seafood Group is currently generating about 0.07 per unit of volatility. If you would invest  4,908  in Lery Seafood Group on September 13, 2024 and sell it today you would earn a total of  307.00  from holding Lery Seafood Group or generate 6.26% return on investment over 90 days.

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

Clean Seas Seafood  vs.  Lery Seafood Group

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lery Seafood Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lery Seafood Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Lery Seafood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Clean Seas and Lery Seafood

The main advantage of trading using opposite Clean Seas and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas 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 Clean Seas Seafood 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.