Correlation Between I Tech and Lime Technologies
Can any of the company-specific risk be diversified away by investing in both I Tech 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 I Tech and Lime Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between I Tech and Lime Technologies AB, you can compare the effects of market volatilities on I Tech 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 I Tech with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Tech and Lime Technologies.
Diversification Opportunities for I Tech and Lime Technologies
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ITECH and Lime is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding I Tech and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and I Tech 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 I Tech 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 I Tech i.e., I Tech and Lime Technologies go up and down completely randomly.
Pair Corralation between I Tech and Lime Technologies
Assuming the 90 days trading horizon I Tech is expected to generate 1.14 times more return on investment than Lime Technologies. However, I Tech is 1.14 times more volatile than Lime Technologies AB. It trades about 0.03 of its potential returns per unit of risk. Lime Technologies AB is currently generating about 0.04 per unit of risk. If you would invest 4,840 in I Tech on August 30, 2024 and sell it today you would earn a total of 60.00 from holding I Tech or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
I Tech vs. Lime Technologies AB
Performance |
| Timeline |
| I Tech |
| Lime Technologies |
I Tech and Lime Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Tech and Lime Technologies
The main advantage of trading using opposite I Tech and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Tech 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 I Tech 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.| Lime Technologies vs. Lifco AB | Lime Technologies vs. Lagercrantz Group AB | Lime Technologies vs. Addtech AB | Lime Technologies vs. Instalco Intressenter 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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