Correlation Between Yihai International and Lery Seafood

Can any of the company-specific risk be diversified away by investing in both Yihai International 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 Yihai International and Lery Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yihai International Holding and Lery Seafood Group, you can compare the effects of market volatilities on Yihai International 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 Yihai International with a short position of Lery Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yihai International and Lery Seafood.

Diversification Opportunities for Yihai International and Lery Seafood

-0.31

Correlation Coefficient

Yihai International  Lery Seafood

Very good diversification

The 3 months correlation between Yihai and Lery is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Yihai International Holding 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 Yihai International 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 Yihai International Holding 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 Yihai International i.e., Yihai International and Lery Seafood go up and down completely randomly.

Pair Corralation between Yihai International and Lery Seafood

Assuming the 90 days horizon Yihai International is expected to generate 3.17 times less return on investment than Lery Seafood. But when comparing it to its historical volatility, Yihai International Holding is 1.57 times less risky than Lery Seafood. It trades about 0.03 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Lery Seafood Group on October 11, 2024 and sell it today you would earn a total of  329.00  from holding Lery Seafood Group or generate 369.66% return on investment over 90 days.

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

Yihai International Holding  vs.  Lery Seafood Group

Yihai International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yihai International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 nearly stable basic indicators, Lery 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 Yihai International and Lery Seafood

The main advantage of trading using opposite Yihai International and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yihai International 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.

The idea behind Yihai International Holding and Lery Seafood Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.