Correlation Between Kinnevik Investment and Lime Technologies

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

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

Diversification Opportunities for Kinnevik Investment and Lime Technologies

0.13

Correlation Coefficient

Kinnevik Investment  Lime Technologies

Average diversification

The 3 months correlation between Kinnevik and Lime is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment 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 Kinnevik Investment 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 Kinnevik Investment 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 Kinnevik Investment i.e., Kinnevik Investment and Lime Technologies go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Lime Technologies

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Lime Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Kinnevik Investment AB is 1.75 times less risky than Lime Technologies. The stock trades about -0.32 of its potential returns per unit of risk. The Lime Technologies AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  31,900  in Lime Technologies AB on December 10, 2024 and sell it today you would earn a total of  6,300  from holding Lime Technologies AB or generate 19.75% return on investment over 90 days.

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

Kinnevik Investment AB  vs.  Lime Technologies AB

Kinnevik Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kinnevik Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lime Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lime Technologies AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lime Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinnevik Investment and Lime Technologies

The main advantage of trading using opposite Kinnevik Investment and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment 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 Kinnevik Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.