Correlation Between Helgeland Sparebank and Lery Seafood

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

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

Diversification Opportunities for Helgeland Sparebank and Lery Seafood

0.6

Correlation Coefficient

Helgeland Sparebank  Lery Seafood

Poor diversification

The 3 months correlation between Helgeland and Lery is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland Sparebank 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 Helgeland Sparebank 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 Helgeland Sparebank 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 Helgeland Sparebank i.e., Helgeland Sparebank and Lery Seafood go up and down completely randomly.

Pair Corralation between Helgeland Sparebank and Lery Seafood

Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 1.05 times more return on investment than Lery Seafood. However, Helgeland Sparebank is 1.05 times more volatile than Lery Seafood Group. It trades about 0.08 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.07 per unit of risk. If you would invest  13,384  in Helgeland Sparebank on September 13, 2024 and sell it today you would earn a total of  1,016  from holding Helgeland Sparebank or generate 7.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Helgeland Sparebank  vs.  Lery Seafood Group

Helgeland Sparebank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Helgeland Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Helgeland Sparebank and Lery Seafood

The main advantage of trading using opposite Helgeland Sparebank and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helgeland Sparebank 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 Helgeland Sparebank 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.