Correlation Between Karnov Group and Lime Technologies

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

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

Diversification Opportunities for Karnov Group and Lime Technologies

0.5

Correlation Coefficient

Karnov Group  Lime Technologies

Very weak diversification

The 3 months correlation between Karnov and Lime is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Karnov Group 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 Karnov Group 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 Karnov Group 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 Karnov Group i.e., Karnov Group and Lime Technologies go up and down completely randomly.

Pair Corralation between Karnov Group and Lime Technologies

Assuming the 90 days trading horizon Karnov Group AB is expected to generate 1.33 times more return on investment than Lime Technologies. However, Karnov Group is 1.33 times more volatile than Lime Technologies AB. It trades about 0.06 of its potential returns per unit of risk. Lime Technologies AB is currently generating about 0.04 per unit of risk. If you would invest  6,500  in Karnov Group AB on September 24, 2024 and sell it today you would earn a total of  1,600  from holding Karnov Group AB or generate 24.62% return on investment over 90 days.

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

Karnov Group AB  vs.  Lime Technologies AB

Karnov Group AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Karnov Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Karnov Group is not utilizing all of its potentials. The current 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 Karnov Group and Lime Technologies

The main advantage of trading using opposite Karnov Group and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karnov Group 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 Karnov Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.