Correlation Between Greater Than and Lime Technologies

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

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

Diversification Opportunities for Greater Than and Lime Technologies

-0.3

Correlation Coefficient

Greater Than  Lime Technologies

Very good diversification

The 3 months correlation between Greater and Lime is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Greater Than AB and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and Greater Than 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 Greater Than AB are associated (or correlated) with Lime Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lime Technologies has no effect on the direction of Greater Than i.e., Greater Than and Lime Technologies go up and down completely randomly.

Pair Corralation between Greater Than and Lime Technologies

Assuming the 90 days trading horizon Greater Than is expected to generate 1.73 times less return on investment than Lime Technologies. In addition to that, Greater Than is 2.78 times more volatile than Lime Technologies AB. It trades about 0.03 of its total potential returns per unit of risk. Lime Technologies AB is currently generating about 0.12 per unit of volatility. If you would invest  33,250  in Lime Technologies AB on September 24, 2024 and sell it today you would earn a total of  2,300  from holding Lime Technologies AB or generate 6.92% return on investment over 90 days.

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

Greater Than AB  vs.  Lime Technologies AB

Greater Than AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lime Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lime Technologies AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lime Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Greater Than and Lime Technologies

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

The idea behind Greater Than AB and Lime 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.