Correlation Between Leroy Seafood and Safestore Holdings

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

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

Diversification Opportunities for Leroy Seafood and Safestore Holdings

-0.46

Correlation Coefficient

Leroy Seafood  Safestore Holdings

Very good diversification

The 3 months correlation between Leroy and Safestore is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Leroy Seafood Group and Safestore Holdings Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safestore Holdings Plc and Leroy 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 Leroy Seafood Group are associated (or correlated) with Safestore Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safestore Holdings Plc has no effect on the direction of Leroy Seafood i.e., Leroy Seafood and Safestore Holdings go up and down completely randomly.

Pair Corralation between Leroy Seafood and Safestore Holdings

Assuming the 90 days trading horizon Leroy Seafood Group is expected to generate 0.95 times more return on investment than Safestore Holdings. However, Leroy Seafood Group is 1.05 times less risky than Safestore Holdings. It trades about 0.1 of its potential returns per unit of risk. Safestore Holdings Plc is currently generating about -0.26 per unit of risk. If you would invest  4,846  in Leroy Seafood Group on September 17, 2024 and sell it today you would earn a total of  477.00  from holding Leroy Seafood Group or generate 9.84% return on investment over 90 days.

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

Leroy Seafood Group  vs.  Safestore Holdings Plc

Leroy Seafood Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leroy Seafood Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Leroy Seafood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Safestore Holdings Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safestore Holdings Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Leroy Seafood and Safestore Holdings

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

The idea behind Leroy Seafood Group and Safestore Holdings Plc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.