Correlation Between Lery Seafood and Kellogg

Can any of the company-specific risk be diversified away by investing in both Lery Seafood and Kellogg 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 Kellogg 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 Kellogg Company, you can compare the effects of market volatilities on Lery Seafood and Kellogg 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 Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lery Seafood and Kellogg.

Diversification Opportunities for Lery Seafood and Kellogg

0.31

Correlation Coefficient

Lery Seafood  Kellogg

Weak diversification

The 3 months correlation between Lery and Kellogg is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company 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 Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of Lery Seafood i.e., Lery Seafood and Kellogg go up and down completely randomly.

Pair Corralation between Lery Seafood and Kellogg

Assuming the 90 days trading horizon Lery Seafood is expected to generate 5.93 times less return on investment than Kellogg. In addition to that, Lery Seafood is 3.03 times more volatile than Kellogg Company. It trades about 0.01 of its total potential returns per unit of risk. Kellogg Company is currently generating about 0.21 per unit of volatility. If you would invest  7,152  in Kellogg Company on September 23, 2024 and sell it today you would earn a total of  554.00  from holding Kellogg Company or generate 7.75% 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.  Kellogg Company

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 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.

Kellogg Company

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellogg Company are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kellogg may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lery Seafood and Kellogg

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

The idea behind Lery Seafood Group and Kellogg Company 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.