Correlation Between Lime Technologies and Kinnevik Investment

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

Diversification Opportunities for Lime Technologies and Kinnevik Investment

0.16

Correlation Coefficient

Lime Technologies  Kinnevik Investment

Average diversification

The 3 months correlation between Lime and Kinnevik is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Kinnevik Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnevik Investment 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 Kinnevik Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnevik Investment has no effect on the direction of Lime Technologies i.e., Lime Technologies and Kinnevik Investment go up and down completely randomly.

Pair Corralation between Lime Technologies and Kinnevik Investment

Assuming the 90 days trading horizon Lime Technologies AB is expected to generate 1.06 times more return on investment than Kinnevik Investment. However, Lime Technologies is 1.06 times more volatile than Kinnevik Investment AB. It trades about 0.13 of its potential returns per unit of risk. Kinnevik Investment AB is currently generating about 0.03 per unit of risk. If you would invest  30,990  in Lime Technologies AB on September 4, 2024 and sell it today you would earn a total of  5,710  from holding Lime Technologies AB or generate 18.43% return on investment over 90 days.

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

Lime Technologies AB  vs.  Kinnevik Investment AB

Lime Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lime Technologies AB are ranked lower than 9 (%) 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.

Kinnevik Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinnevik Investment AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Lime Technologies and Kinnevik Investment

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

The idea behind Lime Technologies AB and Kinnevik Investment 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.