Correlation Between Lery Seafood and Andfjord Salmon

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

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

Diversification Opportunities for Lery Seafood and Andfjord Salmon

0.35

Correlation Coefficient

Lery Seafood  Andfjord Salmon

Weak diversification

The 3 months correlation between Lery and Andfjord is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Andfjord Salmon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andfjord Salmon AS and Lery Seafood 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 Lery Seafood Group are associated (or correlated) with Andfjord Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andfjord Salmon AS has no effect on the direction of Lery Seafood i.e., Lery Seafood and Andfjord Salmon go up and down completely randomly.

Pair Corralation between Lery Seafood and Andfjord Salmon

Assuming the 90 days trading horizon Lery Seafood is expected to generate 5.49 times less return on investment than Andfjord Salmon. But when comparing it to its historical volatility, Lery Seafood Group is 1.5 times less risky than Andfjord Salmon. It trades about 0.07 of its potential returns per unit of risk. Andfjord Salmon AS is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,070  in Andfjord Salmon AS on September 12, 2024 and sell it today you would earn a total of  1,180  from holding Andfjord Salmon AS or generate 38.44% return on investment over 90 days.

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

Lery Seafood Group  vs.  Andfjord Salmon AS

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 persistent technical and fundamental indicators, Lery Seafood is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Andfjord Salmon AS

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Andfjord Salmon AS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Andfjord Salmon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lery Seafood and Andfjord Salmon

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

The idea behind Lery Seafood Group and Andfjord Salmon AS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.