Correlation Between Enea AB and Lime Technologies

Can any of the company-specific risk be diversified away by investing in both Enea AB 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 Enea AB and Lime Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enea AB and Lime Technologies AB, you can compare the effects of market volatilities on Enea AB 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 Enea AB with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enea AB and Lime Technologies.

Diversification Opportunities for Enea AB and Lime Technologies

-0.26

Correlation Coefficient

Enea AB  Lime Technologies

Very good diversification

The 3 months correlation between Enea and Lime is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Enea AB and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and Enea AB 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 Enea AB 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 Enea AB i.e., Enea AB and Lime Technologies go up and down completely randomly.

Pair Corralation between Enea AB and Lime Technologies

Assuming the 90 days trading horizon Enea AB is expected to under-perform the Lime Technologies. In addition to that, Enea AB is 1.15 times more volatile than Lime Technologies AB. It trades about -0.02 of its total potential returns per unit of risk. Lime Technologies AB is currently generating about 0.03 per unit of volatility. If you would invest  25,785  in Lime Technologies AB on January 31, 2024 and sell it today you would earn a total of  6,165  from holding Lime Technologies AB or generate 23.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Enea AB  vs.  Lime Technologies AB

Enea AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enea AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enea AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Lime Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lime Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lime Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Enea AB and Lime Technologies

The main advantage of trading using opposite Enea AB and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enea AB 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 Enea AB 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.