Correlation Between Gecina SA and Lerøy Seafood

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

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

Diversification Opportunities for Gecina SA and Lerøy Seafood

-0.36

Correlation Coefficient

Gecina SA  Lerøy Seafood

Very good diversification

The 3 months correlation between Gecina and Lerøy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gecina SA 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 Gecina SA 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 Gecina SA are associated (or correlated) with Lerøy 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 Gecina SA i.e., Gecina SA and Lerøy Seafood go up and down completely randomly.

Pair Corralation between Gecina SA and Lerøy Seafood

Assuming the 90 days trading horizon Gecina SA is expected to under-perform the Lerøy Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Gecina SA is 5.86 times less risky than Lerøy Seafood. The stock trades about -0.01 of its potential returns per unit of risk. The Lery Seafood Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Lery Seafood Group on September 21, 2024 and sell it today you would earn a total of  254.00  from holding Lery Seafood Group or generate 164.94% return on investment over 90 days.

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

Gecina SA  vs.  Lery Seafood Group

Gecina SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gecina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lery Seafood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lery Seafood Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lerøy Seafood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gecina SA and Lerøy Seafood

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

The idea behind Gecina SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.