Correlation Between Pierce Group and Lime Technologies

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

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

Diversification Opportunities for Pierce Group and Lime Technologies

-0.37

Correlation Coefficient

Pierce Group  Lime Technologies

Very good diversification

The 3 months correlation between Pierce and Lime is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Pierce Group AB and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and Pierce Group 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 Pierce Group AB are associated (or correlated) with Lime Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lime Technologies has no effect on the direction of Pierce Group i.e., Pierce Group and Lime Technologies go up and down completely randomly.

Pair Corralation between Pierce Group and Lime Technologies

Assuming the 90 days trading horizon Pierce Group AB is expected to under-perform the Lime Technologies. In addition to that, Pierce Group is 1.19 times more volatile than Lime Technologies AB. It trades about -0.05 of its total potential returns per unit of risk. Lime Technologies AB is currently generating about 0.04 per unit of volatility. If you would invest  33,450  in Lime Technologies AB on October 26, 2024 and sell it today you would earn a total of  1,600  from holding Lime Technologies AB or generate 4.78% return on investment over 90 days.

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

Pierce Group AB  vs.  Lime Technologies AB

Pierce Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lime Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Pierce Group and Lime Technologies

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

The idea behind Pierce Group AB and Lime Technologies 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.