Correlation Between Impact Coatings and Lidds AB

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

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

Diversification Opportunities for Impact Coatings and Lidds AB

0.0

Correlation Coefficient

Impact Coatings  Lidds AB

Pay attention - limited upside

The 3 months correlation between Impact and Lidds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Impact Coatings publ and Lidds AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lidds AB and Impact Coatings 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 Impact Coatings publ are associated (or correlated) with Lidds AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lidds AB has no effect on the direction of Impact Coatings i.e., Impact Coatings and Lidds AB go up and down completely randomly.

Pair Corralation between Impact Coatings and Lidds AB

Assuming the 90 days trading horizon Impact Coatings publ is expected to under-perform the Lidds AB. But the stock apears to be less risky and, when comparing its historical volatility, Impact Coatings publ is 3.28 times less risky than Lidds AB. The stock trades about -0.1 of its potential returns per unit of risk. The Lidds AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Lidds AB on September 3, 2024 and sell it today you would lose (2.00) from holding Lidds AB or give up 15.38% of portfolio value over 90 days.

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

Impact Coatings publ  vs.  Lidds AB

Impact Coatings publ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Coatings publ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lidds AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lidds AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lidds AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Impact Coatings and Lidds AB

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

The idea behind Impact Coatings publ and Lidds 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.