Correlation Between Lery Seafood and Ebro Foods

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

Diversification Opportunities for Lery Seafood and Ebro Foods

0.35

Correlation Coefficient

Lery Seafood  Ebro Foods

Weak diversification

The 3 months correlation between Lery and Ebro is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of Lery Seafood i.e., Lery Seafood and Ebro Foods go up and down completely randomly.

Pair Corralation between Lery Seafood and Ebro Foods

Assuming the 90 days trading horizon Lery Seafood Group is expected to generate 1.84 times more return on investment than Ebro Foods. However, Lery Seafood is 1.84 times more volatile than Ebro Foods SA. It trades about 0.01 of its potential returns per unit of risk. Ebro Foods SA is currently generating about 0.01 per unit of risk. If you would invest  4,844  in Lery Seafood Group on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Lery Seafood Group or generate 0.41% return on investment over 90 days.

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

Lery Seafood Group  vs.  Ebro Foods SA

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 quite persistent technical and fundamental indicators, Lery Seafood is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ebro Foods SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebro Foods SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ebro Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lery Seafood and Ebro Foods

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

The idea behind Lery Seafood Group and Ebro Foods SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.