Correlation Between Lime Technologies and Enersize

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

Diversification Opportunities for Lime Technologies and Enersize

-0.28

Correlation Coefficient

Lime Technologies  Enersize

Very good diversification

The 3 months correlation between Lime and Enersize is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Enersize Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersize Oy 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 Enersize. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersize Oy has no effect on the direction of Lime Technologies i.e., Lime Technologies and Enersize go up and down completely randomly.

Pair Corralation between Lime Technologies and Enersize

Assuming the 90 days trading horizon Lime Technologies AB is expected to under-perform the Enersize. But the stock apears to be less risky and, when comparing its historical volatility, Lime Technologies AB is 11.13 times less risky than Enersize. The stock trades about -0.04 of its potential returns per unit of risk. The Enersize Oy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.48  in Enersize Oy on December 30, 2024 and sell it today you would lose (0.05) from holding Enersize Oy or give up 10.42% of portfolio value over 90 days.

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

Lime Technologies AB  vs.  Enersize Oy

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.

Enersize Oy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enersize Oy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Enersize unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lime Technologies and Enersize

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

The idea behind Lime Technologies AB and Enersize Oy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..