Correlation Between Lery Seafood and Power Nickel

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

Diversification Opportunities for Lery Seafood and Power Nickel

-0.29

Correlation Coefficient

Lery Seafood  Power Nickel

Very good diversification

The 3 months correlation between Lery and Power is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Power Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Nickel 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 Power Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Nickel has no effect on the direction of Lery Seafood i.e., Lery Seafood and Power Nickel go up and down completely randomly.

Pair Corralation between Lery Seafood and Power Nickel

Assuming the 90 days horizon Lery Seafood Group is expected to under-perform the Power Nickel. But the stock apears to be less risky and, when comparing its historical volatility, Lery Seafood Group is 5.0 times less risky than Power Nickel. The stock trades about -0.17 of its potential returns per unit of risk. The Power Nickel is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Power Nickel on October 10, 2024 and sell it today you would earn a total of  28.00  from holding Power Nickel or generate 56.0% return on investment over 90 days.

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

Lery Seafood Group  vs.  Power Nickel

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.

Power Nickel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power Nickel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Power Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lery Seafood and Power Nickel

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

The idea behind Lery Seafood Group and Power Nickel 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.