Correlation Between Aldel Financial and Lipocine

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

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

Diversification Opportunities for Aldel Financial and Lipocine

0.12

Correlation Coefficient

Aldel Financial  Lipocine

Average diversification

The 3 months correlation between Aldel and Lipocine is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Aldel Financial i.e., Aldel Financial and Lipocine go up and down completely randomly.

Pair Corralation between Aldel Financial and Lipocine

Given the investment horizon of 90 days Aldel Financial II is expected to generate 0.02 times more return on investment than Lipocine. However, Aldel Financial II is 41.6 times less risky than Lipocine. It trades about 0.18 of its potential returns per unit of risk. Lipocine is currently generating about 0.0 per unit of risk. If you would invest  990.00  in Aldel Financial II on October 4, 2024 and sell it today you would earn a total of  3.00  from holding Aldel Financial II or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.62%
Values	Daily Returns

Aldel Financial II  vs.  Lipocine

Aldel Financial II

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aldel Financial and Lipocine

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

The idea behind Aldel Financial II and Lipocine 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.