Correlation Between Danone PK and Lery Seafood

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

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

Diversification Opportunities for Danone PK and Lery Seafood

0.61

Correlation Coefficient

Danone PK  Lery Seafood

Poor diversification

The 3 months correlation between Danone and Lery is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Danone PK and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group and Danone PK 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 Danone PK are associated (or correlated) with Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Danone PK i.e., Danone PK and Lery Seafood go up and down completely randomly.

Pair Corralation between Danone PK and Lery Seafood

If you would invest  1,285  in Danone PK on January 28, 2024 and sell it today you would earn a total of  0.00  from holding Danone PK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Danone PK  vs.  Lery Seafood Group

Danone PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danone PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lery Seafood Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lery Seafood Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Lery Seafood may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Danone PK and Lery Seafood

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

The idea behind Danone PK and Lery Seafood Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.