Correlation Between Lime Technologies and Norion Bank

Can any of the company-specific risk be diversified away by investing in both Lime Technologies and Norion Bank 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 Norion Bank 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 Norion Bank, you can compare the effects of market volatilities on Lime Technologies and Norion Bank 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 Norion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lime Technologies and Norion Bank.

Diversification Opportunities for Lime Technologies and Norion Bank

0.32

Correlation Coefficient

Lime Technologies  Norion Bank

Weak diversification

The 3 months correlation between Lime and Norion is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lime Technologies AB and Norion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norion Bank 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 Norion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norion Bank has no effect on the direction of Lime Technologies i.e., Lime Technologies and Norion Bank go up and down completely randomly.

Pair Corralation between Lime Technologies and Norion Bank

Assuming the 90 days trading horizon Lime Technologies is expected to generate 35.55 times less return on investment than Norion Bank. But when comparing it to its historical volatility, Lime Technologies AB is 1.1 times less risky than Norion Bank. It trades about 0.01 of its potential returns per unit of risk. Norion Bank is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3,952  in Norion Bank on April 24, 2025 and sell it today you would earn a total of  1,928  from holding Norion Bank or generate 48.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lime Technologies AB  vs.  Norion Bank

Lime Technologies

Risk-Adjusted Performance

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.

Norion Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Norion Bank are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Norion Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lime Technologies and Norion Bank

The main advantage of trading using opposite Lime Technologies and Norion Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lime Technologies position performs unexpectedly, Norion Bank 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 Norion Bank will offset losses from the drop in Norion Bank's long position.

The idea behind Lime Technologies AB and Norion Bank 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.