Correlation Between Snap and Lime Technologies
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Lime Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Lime Technologies AB, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Lime Technologies.
Diversification Opportunities for Snap and Lime Technologies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Lime is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and Snap 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 Snap Inc 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 Snap i.e., Snap and Lime Technologies go up and down completely randomly.
Pair Corralation between Snap and Lime Technologies
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Lime Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Snap Inc is 1.02 times less risky than Lime Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Lime Technologies AB is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 32,800 in Lime Technologies AB on September 1, 2024 and sell it today you would earn a total of 4,550 from holding Lime Technologies AB or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Snap Inc vs. Lime Technologies AB
Performance |
| Timeline |
| Snap Inc |
| Lime Technologies |
Snap and Lime Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Lime Technologies
The main advantage of trading using opposite Snap and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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 Snap Inc 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. Catena Media plc | Lime Technologies vs. Kambi Group PLC | Lime Technologies vs. Betsson AB | Lime Technologies vs. Invisio Communications 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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