Correlation Between Lime Technologies and Teqnion AB

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

Diversification Opportunities for Lime Technologies and Teqnion AB

-0.38

Correlation Coefficient

Lime Technologies  Teqnion AB

Very good diversification

The 3 months correlation between Lime and Teqnion is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Teqnion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teqnion AB 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 Teqnion AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teqnion AB has no effect on the direction of Lime Technologies i.e., Lime Technologies and Teqnion AB go up and down completely randomly.

Pair Corralation between Lime Technologies and Teqnion AB

Assuming the 90 days trading horizon Lime Technologies AB is expected to under-perform the Teqnion AB. In addition to that, Lime Technologies is 1.26 times more volatile than Teqnion AB. It trades about -0.04 of its total potential returns per unit of risk. Teqnion AB is currently generating about 0.05 per unit of volatility. If you would invest  16,520  in Teqnion AB on December 30, 2024 and sell it today you would earn a total of  980.00  from holding Teqnion AB or generate 5.93% return on investment over 90 days.

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

Lime Technologies AB  vs.  Teqnion AB

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.

Teqnion AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teqnion AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Teqnion AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lime Technologies and Teqnion AB

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

The idea behind Lime Technologies AB and Teqnion 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.