Correlation Between Lime Technologies and Divio Technologies

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

By analyzing existing cross correlation between Lime Technologies AB and Divio Technologies AB, you can compare the effects of market volatilities on Lime Technologies and Divio Technologies 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 Lime Technologies with a short position of Divio Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lime Technologies and Divio Technologies.

Diversification Opportunities for Lime Technologies and Divio Technologies

-0.41

Correlation Coefficient

Lime Technologies  Divio Technologies

Very good diversification

The 3 months correlation between Lime and Divio is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Divio Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Divio Technologies and Lime Technologies 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 Lime Technologies AB are associated (or correlated) with Divio Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Divio Technologies has no effect on the direction of Lime Technologies i.e., Lime Technologies and Divio Technologies go up and down completely randomly.

Pair Corralation between Lime Technologies and Divio Technologies

Assuming the 90 days trading horizon Lime Technologies AB is expected to under-perform the Divio Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Lime Technologies AB is 1.43 times less risky than Divio Technologies. The stock trades about -0.24 of its potential returns per unit of risk. The Divio Technologies AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Divio Technologies AB on January 28, 2024 and sell it today you would earn a total of  0.00  from holding Divio Technologies AB or generate 0.0% return on investment over 90 days.

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

Lime Technologies AB  vs.  Divio Technologies AB

Lime Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lime Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lime Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Divio Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Divio Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lime Technologies and Divio Technologies

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

The idea behind Lime Technologies AB and Divio Technologies AB 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.