Correlation Between Lery Seafood and Lifeway Foods

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

Diversification Opportunities for Lery Seafood and Lifeway Foods

0.39

Correlation Coefficient

Lery Seafood  Lifeway Foods

Weak diversification

The 3 months correlation between Lery and Lifeway is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Lery Seafood i.e., Lery Seafood and Lifeway Foods go up and down completely randomly.

Pair Corralation between Lery Seafood and Lifeway Foods

Assuming the 90 days trading horizon Lery Seafood is expected to generate 15.94 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, Lery Seafood Group is 2.49 times less risky than Lifeway Foods. It trades about 0.01 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,890  in Lifeway Foods on September 23, 2024 and sell it today you would earn a total of  310.00  from holding Lifeway Foods or generate 16.4% 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.  Lifeway Foods

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.

Lifeway Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lifeway Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lifeway Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lery Seafood and Lifeway Foods

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

The idea behind Lery Seafood Group and Lifeway Foods 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.