Correlation Between Sermsuk Public and Lee Feed

Can any of the company-specific risk be diversified away by investing in both Sermsuk Public and Lee Feed 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 Sermsuk Public and Lee Feed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sermsuk Public and Lee Feed Mill, you can compare the effects of market volatilities on Sermsuk Public and Lee Feed 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 Sermsuk Public with a short position of Lee Feed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sermsuk Public and Lee Feed.

Diversification Opportunities for Sermsuk Public and Lee Feed

0.21

Correlation Coefficient

Sermsuk Public  Lee Feed

Modest diversification

The 3 months correlation between Sermsuk and Lee is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sermsuk Public and Lee Feed Mill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Feed Mill and Sermsuk Public 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 Sermsuk Public are associated (or correlated) with Lee Feed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Feed Mill has no effect on the direction of Sermsuk Public i.e., Sermsuk Public and Lee Feed go up and down completely randomly.

Pair Corralation between Sermsuk Public and Lee Feed

Assuming the 90 days trading horizon Sermsuk Public is expected to generate 3.43 times more return on investment than Lee Feed. However, Sermsuk Public is 3.43 times more volatile than Lee Feed Mill. It trades about 0.0 of its potential returns per unit of risk. Lee Feed Mill is currently generating about -0.05 per unit of risk. If you would invest  6,175  in Sermsuk Public on September 14, 2024 and sell it today you would lose (200.00) from holding Sermsuk Public or give up 3.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Sermsuk Public  vs.  Lee Feed Mill

Sermsuk Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sermsuk Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Sermsuk Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lee Feed Mill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lee Feed Mill has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Lee Feed is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sermsuk Public and Lee Feed

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

The idea behind Sermsuk Public and Lee Feed Mill 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.