Correlation Between Beowulf Mining and Lime Technologies

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

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

Diversification Opportunities for Beowulf Mining and Lime Technologies

-0.43

Correlation Coefficient

Beowulf Mining  Lime Technologies

Very good diversification

The 3 months correlation between Beowulf and Lime is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining PLC and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and Beowulf Mining 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 Beowulf Mining PLC 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 Beowulf Mining i.e., Beowulf Mining and Lime Technologies go up and down completely randomly.

Pair Corralation between Beowulf Mining and Lime Technologies

Assuming the 90 days trading horizon Beowulf Mining PLC is expected to generate 16.66 times more return on investment than Lime Technologies. However, Beowulf Mining is 16.66 times more volatile than Lime Technologies AB. It trades about 0.04 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  48.00  in Beowulf Mining PLC on September 19, 2024 and sell it today you would earn a total of  130.00  from holding Beowulf Mining PLC or generate 270.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Beowulf Mining PLC  vs.  Lime Technologies AB

Beowulf Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beowulf Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lime Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lime Technologies AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lime Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beowulf Mining and Lime Technologies

The main advantage of trading using opposite Beowulf Mining and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beowulf Mining 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 Beowulf Mining PLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.