Correlation Between Melhus Sparebank and Lery Seafood
Can any of the company-specific risk be diversified away by investing in both Melhus 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 Melhus 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 Melhus Sparebank and Lery Seafood Group, you can compare the effects of market volatilities on Melhus 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 Melhus Sparebank with a short position of Lery Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Lery Seafood.
Diversification Opportunities for Melhus Sparebank and Lery Seafood
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Melhus and Lery is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Melhus 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 Melhus 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 Melhus 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 Melhus Sparebank i.e., Melhus Sparebank and Lery Seafood go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Lery Seafood
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 0.65 times more return on investment than Lery Seafood. However, Melhus Sparebank is 1.54 times less risky than Lery Seafood. It trades about 0.17 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.05 per unit of risk. If you would invest 15,810 in Melhus Sparebank on December 2, 2024 and sell it today you would earn a total of 1,688 from holding Melhus Sparebank or generate 10.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Melhus Sparebank vs. Lery Seafood Group
Performance |
Timeline |
Melhus Sparebank |
Lery Seafood Group |
Melhus Sparebank and Lery Seafood Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Melhus Sparebank and Lery Seafood
The main advantage of trading using opposite Melhus Sparebank and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus 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.Melhus Sparebank vs. Sparebank 1 Nord Norge | Melhus Sparebank vs. Aurskog Sparebank | Melhus Sparebank vs. Helgeland Sparebank |
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Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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