Correlation Between Lagercrantz Group and Lime Technologies

Can any of the company-specific risk be diversified away by investing in both Lagercrantz 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 Lagercrantz 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 Lagercrantz Group AB and Lime Technologies AB, you can compare the effects of market volatilities on Lagercrantz 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 Lagercrantz Group with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lagercrantz Group and Lime Technologies.

Diversification Opportunities for Lagercrantz Group and Lime Technologies

0.35

Correlation Coefficient

Lagercrantz Group  Lime Technologies

Weak diversification

The 3 months correlation between Lagercrantz and Lime is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lagercrantz 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 Lagercrantz 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 Lagercrantz 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 Lagercrantz Group i.e., Lagercrantz Group and Lime Technologies go up and down completely randomly.

Pair Corralation between Lagercrantz Group and Lime Technologies

Assuming the 90 days trading horizon Lagercrantz Group AB is expected to generate 0.47 times more return on investment than Lime Technologies. However, Lagercrantz Group AB is 2.15 times less risky than Lime Technologies. It trades about 0.28 of its potential returns per unit of risk. Lime Technologies AB is currently generating about 0.12 per unit of risk. If you would invest  19,510  in Lagercrantz Group AB on September 24, 2024 and sell it today you would earn a total of  1,610  from holding Lagercrantz Group AB or generate 8.25% return on investment over 90 days.

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

Lagercrantz Group AB  vs.  Lime Technologies AB

Lagercrantz Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lagercrantz Group AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Lagercrantz Group sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Lagercrantz Group and Lime Technologies

The main advantage of trading using opposite Lagercrantz Group and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lagercrantz 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 Lagercrantz 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.