Correlation Between Lime Technologies and Better Collective

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

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

Diversification Opportunities for Lime Technologies and Better Collective

0.57

Correlation Coefficient

Lime Technologies  Better Collective

Very weak diversification

The 3 months correlation between Lime and Better is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Better Collective in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Collective and Lime Technologies 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 Lime Technologies AB are associated (or correlated) with Better Collective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Collective has no effect on the direction of Lime Technologies i.e., Lime Technologies and Better Collective go up and down completely randomly.

Pair Corralation between Lime Technologies and Better Collective

Assuming the 90 days trading horizon Lime Technologies AB is expected to under-perform the Better Collective. In addition to that, Lime Technologies is 1.08 times more volatile than Better Collective. It trades about -0.04 of its total potential returns per unit of risk. Better Collective is currently generating about 0.02 per unit of volatility. If you would invest  11,140  in Better Collective on December 30, 2024 and sell it today you would earn a total of  80.00  from holding Better Collective or generate 0.72% return on investment over 90 days.

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

Lime Technologies AB  vs.  Better Collective

Lime Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lime Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Better Collective

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Better Collective are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Better Collective is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lime Technologies and Better Collective

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

The idea behind Lime Technologies AB and Better Collective 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.