Correlation Between Smart Eye and Lime Technologies

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Can any of the company-specific risk be diversified away by investing in both Smart Eye 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 Smart Eye and Lime Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Eye AB and Lime Technologies AB, you can compare the effects of market volatilities on Smart Eye 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 Smart Eye with a short position of Lime Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Eye and Lime Technologies.

Diversification Opportunities for Smart Eye and Lime Technologies

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Smart and Lime is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye 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 Smart Eye 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 Smart Eye 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 Smart Eye i.e., Smart Eye and Lime Technologies go up and down completely randomly.

Pair Corralation between Smart Eye and Lime Technologies

Assuming the 90 days trading horizon Smart Eye AB is expected to generate 1.46 times more return on investment than Lime Technologies. However, Smart Eye is 1.46 times more volatile than Lime Technologies AB. It trades about 0.05 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  4,370  in Smart Eye AB on April 7, 2025 and sell it today you would earn a total of  3,260  from holding Smart Eye AB or generate 74.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Smart Eye AB  vs.  Lime Technologies AB

 Performance 
       Timeline  
Smart Eye AB 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Smart Eye AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Smart Eye unveiled solid returns over the last few months and may actually be approaching a breakup point.
Lime Technologies 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lime Technologies AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lime Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Smart Eye and Lime Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smart Eye and Lime Technologies

The main advantage of trading using opposite Smart Eye and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Eye 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 Smart Eye 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.
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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