Correlation Between Ranplan and Lime Technologies
Can any of the company-specific risk be diversified away by investing in both Ranplan 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 Ranplan and Lime Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ranplan Group and Lime Technologies AB, you can compare the effects of market volatilities on Ranplan 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 Ranplan with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ranplan and Lime Technologies.
Diversification Opportunities for Ranplan and Lime Technologies
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ranplan and Lime is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ranplan 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 Ranplan 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 Ranplan 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 Ranplan i.e., Ranplan and Lime Technologies go up and down completely randomly.
Pair Corralation between Ranplan and Lime Technologies
Assuming the 90 days trading horizon Ranplan Group is expected to generate 2.84 times more return on investment than Lime Technologies. However, Ranplan is 2.84 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 0.05 per unit of risk. If you would invest 196.00 in Ranplan Group on September 13, 2024 and sell it today you would lose (51.00) from holding Ranplan Group or give up 26.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ranplan Group vs. Lime Technologies AB
Performance |
| Timeline |
| Ranplan Group |
| Lime Technologies |
Ranplan and Lime Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ranplan and Lime Technologies
The main advantage of trading using opposite Ranplan and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ranplan 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 Ranplan Group 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. 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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