Correlation Between Lery Seafood and LEROY SEAFOOD

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

Diversification Opportunities for Lery Seafood and LEROY SEAFOOD

0.54

Correlation Coefficient

Lery Seafood  LEROY SEAFOOD

Very weak diversification

The 3 months correlation between Lery and LEROY is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and LEROY SEAFOOD GRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEROY SEAFOOD GRUNSPADR has no effect on the direction of Lery Seafood i.e., Lery Seafood and LEROY SEAFOOD go up and down completely randomly.

Pair Corralation between Lery Seafood and LEROY SEAFOOD

Assuming the 90 days trading horizon Lery Seafood Group is expected to under-perform the LEROY SEAFOOD. But the stock apears to be less risky and, when comparing its historical volatility, Lery Seafood Group is 1.05 times less risky than LEROY SEAFOOD. The stock trades about -0.19 of its potential returns per unit of risk. The LEROY SEAFOOD GRUNSPADR is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  850.00  in LEROY SEAFOOD GRUNSPADR on October 10, 2024 and sell it today you would lose (50.00) from holding LEROY SEAFOOD GRUNSPADR or give up 5.88% of portfolio value over 90 days.

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

Lery Seafood Group  vs.  LEROY SEAFOOD GRUNSPADR

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.

LEROY SEAFOOD GRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEROY SEAFOOD GRUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, LEROY 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 Lery Seafood and LEROY SEAFOOD

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

The idea behind Lery Seafood Group and LEROY SEAFOOD GRUNSPADR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.