Correlation Between Nitro Games and Lime Technologies

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

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

Diversification Opportunities for Nitro Games and Lime Technologies

0.31

Correlation Coefficient

Nitro Games  Lime Technologies

Weak diversification

The 3 months correlation between Nitro and Lime is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nitro Games Oyj and Lime Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lime Technologies and Nitro Games 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 Nitro Games Oyj 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 Nitro Games i.e., Nitro Games and Lime Technologies go up and down completely randomly.

Pair Corralation between Nitro Games and Lime Technologies

Assuming the 90 days trading horizon Nitro Games Oyj is expected to generate 1.87 times more return on investment than Lime Technologies. However, Nitro Games is 1.87 times more volatile than Lime Technologies AB. It trades about 0.12 of its potential returns per unit of risk. Lime Technologies AB is currently generating about 0.06 per unit of risk. If you would invest  184.00  in Nitro Games Oyj on September 19, 2024 and sell it today you would earn a total of  54.00  from holding Nitro Games Oyj or generate 29.35% return on investment over 90 days.

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

Nitro Games Oyj  vs.  Lime Technologies AB

Nitro Games Oyj

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nitro Games Oyj are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nitro Games unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 Nitro Games and Lime Technologies

The main advantage of trading using opposite Nitro Games and Lime Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nitro Games 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 Nitro Games Oyj 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.