Correlation Between Lime Technologies and Platzer Fastigheter

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

Diversification Opportunities for Lime Technologies and Platzer Fastigheter

-0.29

Correlation Coefficient

Lime Technologies  Platzer Fastigheter

Very good diversification

The 3 months correlation between Lime and Platzer is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Platzer Fastigheter Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platzer Fastigheter 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 Platzer Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platzer Fastigheter has no effect on the direction of Lime Technologies i.e., Lime Technologies and Platzer Fastigheter go up and down completely randomly.

Pair Corralation between Lime Technologies and Platzer Fastigheter

Assuming the 90 days trading horizon Lime Technologies AB is expected to generate 1.65 times more return on investment than Platzer Fastigheter. However, Lime Technologies is 1.65 times more volatile than Platzer Fastigheter Holding. It trades about -0.04 of its potential returns per unit of risk. Platzer Fastigheter Holding is currently generating about -0.08 per unit of risk. If you would invest  36,850  in Lime Technologies AB on December 30, 2024 and sell it today you would lose (3,550) from holding Lime Technologies AB or give up 9.63% 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.  Platzer Fastigheter Holding

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.

Platzer Fastigheter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Platzer Fastigheter Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lime Technologies and Platzer Fastigheter

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

The idea behind Lime Technologies AB and Platzer Fastigheter Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.