Correlation Between Lery Seafood and SalMar ASA

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

Diversification Opportunities for Lery Seafood and SalMar ASA

0.88

Correlation Coefficient

Lery Seafood  SalMar ASA

Very poor diversification

The 3 months correlation between Lery and SalMar is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Lery Seafood i.e., Lery Seafood and SalMar ASA go up and down completely randomly.

Pair Corralation between Lery Seafood and SalMar ASA

Assuming the 90 days trading horizon Lery Seafood Group is expected to generate 0.87 times more return on investment than SalMar ASA. However, Lery Seafood Group is 1.15 times less risky than SalMar ASA. It trades about 0.0 of its potential returns per unit of risk. SalMar ASA is currently generating about -0.08 per unit of risk. If you would invest  4,916  in Lery Seafood Group on December 30, 2024 and sell it today you would lose (20.00) from holding Lery Seafood Group or give up 0.41% of portfolio value over 90 days.

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

Lery Seafood Group  vs.  SalMar ASA

Lery Seafood Group

Risk-Adjusted Performance

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.

SalMar ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SalMar ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Lery Seafood and SalMar ASA

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

The idea behind Lery Seafood Group and SalMar ASA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..