Correlation Between Lime Technologies and Sleep Cycle
Can any of the company-specific risk be diversified away by investing in both Lime Technologies and Sleep Cycle 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 Sleep Cycle 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 Sleep Cycle AB, you can compare the effects of market volatilities on Lime Technologies and Sleep Cycle 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 Sleep Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lime Technologies and Sleep Cycle.
Diversification Opportunities for Lime Technologies and Sleep Cycle
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lime and Sleep is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Sleep Cycle AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Cycle 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 Sleep Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Cycle AB has no effect on the direction of Lime Technologies i.e., Lime Technologies and Sleep Cycle go up and down completely randomly.
Pair Corralation between Lime Technologies and Sleep Cycle
Assuming the 90 days trading horizon Lime Technologies AB is expected to generate 0.96 times more return on investment than Sleep Cycle. However, Lime Technologies AB is 1.05 times less risky than Sleep Cycle. It trades about 0.04 of its potential returns per unit of risk. Sleep Cycle AB is currently generating about 0.01 per unit of risk. If you would invest 23,344 in Lime Technologies AB on September 25, 2024 and sell it today you would earn a total of 12,256 from holding Lime Technologies AB or generate 52.5% 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. Sleep Cycle AB
Performance |
| Timeline |
| Lime Technologies |
| Sleep Cycle AB |
Lime Technologies and Sleep Cycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lime Technologies and Sleep Cycle
The main advantage of trading using opposite Lime Technologies and Sleep Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lime Technologies position performs unexpectedly, Sleep Cycle 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 Sleep Cycle will offset losses from the drop in Sleep Cycle's long position.| Lime Technologies vs. Vitec Software Group | Lime Technologies vs. MIPS AB | Lime Technologies vs. Sinch AB | Lime Technologies vs. Stillfront Group AB |
| Sleep Cycle vs. FormPipe Software AB | Sleep Cycle vs. Cint Group AB | Sleep Cycle vs. Lime Technologies AB | Sleep Cycle vs. Micro Systemation 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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