Correlation Between Lerøy Seafood and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both Lerøy Seafood and SWISS WATER 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 Lerøy Seafood and SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on Lerøy Seafood and SWISS WATER 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 Lerøy Seafood with a short position of SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lerøy Seafood and SWISS WATER.
Diversification Opportunities for Lerøy Seafood and SWISS WATER
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lerøy and SWISS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE and Lerøy 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Lerøy Seafood i.e., Lerøy Seafood and SWISS WATER go up and down completely randomly.
Pair Corralation between Lerøy Seafood and SWISS WATER
Assuming the 90 days horizon Lery Seafood Group is expected to generate 2.89 times more return on investment than SWISS WATER. However, Lerøy Seafood is 2.89 times more volatile than SWISS WATER DECAFFCOFFEE. It trades about 0.08 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.06 per unit of risk. If you would invest 153.00 in Lery Seafood Group on September 12, 2024 and sell it today you would earn a total of 287.00 from holding Lery Seafood Group or generate 187.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lery Seafood Group vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| Lery Seafood Group |
| SWISS WATER DECAFFCOFFEE |
Lerøy Seafood and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lerøy Seafood and SWISS WATER
The main advantage of trading using opposite Lerøy Seafood and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| Lerøy Seafood vs. Mowi ASA | Lerøy Seafood vs. LEROY SEAFOOD GRUNSPADR | Lerøy Seafood vs. Yihai International Holding | Lerøy Seafood vs. Lery Seafood Group |
| SWISS WATER vs. Chongqing Machinery Electric | SWISS WATER vs. Insteel Industries | SWISS WATER vs. RELIANCE STEEL AL | SWISS WATER vs. Hitachi Construction Machinery |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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