Correlation Between IAR Systems and Lime Technologies
Can any of the company-specific risk be diversified away by investing in both IAR Systems 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 IAR Systems and Lime Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAR Systems Group and Lime Technologies AB, you can compare the effects of market volatilities on IAR Systems 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 IAR Systems with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Lime Technologies.
Diversification Opportunities for IAR Systems and Lime Technologies
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IAR and Lime is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and IAR Systems 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 IAR Systems Group 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 IAR Systems i.e., IAR Systems and Lime Technologies go up and down completely randomly.
Pair Corralation between IAR Systems and Lime Technologies
Assuming the 90 days trading horizon IAR Systems is expected to generate 92.93 times less return on investment than Lime Technologies. But when comparing it to its historical volatility, IAR Systems Group is 1.07 times less risky than Lime Technologies. It trades about 0.0 of its potential returns per unit of risk. Lime Technologies AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 20,370 in Lime Technologies AB on August 29, 2024 and sell it today you would earn a total of 13,780 from holding Lime Technologies AB or generate 67.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Lime Technologies AB
Performance |
| Timeline |
| IAR Systems Group |
| Lime Technologies |
IAR Systems and Lime Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Lime Technologies
The main advantage of trading using opposite IAR Systems and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems 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.| IAR Systems vs. CellaVision AB | IAR Systems vs. HMS Networks AB | IAR Systems vs. Enea AB | IAR Systems vs. Know IT AB |
| Lime Technologies vs. Vitec Software Group | Lime Technologies vs. MIPS AB | Lime Technologies vs. Sinch AB | Lime Technologies vs. Stillfront Group AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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