Correlation Between AlzeCure Pharma and Lipum AB

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

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

Diversification Opportunities for AlzeCure Pharma and Lipum AB

-0.89

Correlation Coefficient

AlzeCure Pharma  Lipum AB

Pay attention - limited upside

The 3 months correlation between AlzeCure and Lipum is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding AlzeCure Pharma and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB and AlzeCure Pharma 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 AlzeCure Pharma are associated (or correlated) with Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of AlzeCure Pharma i.e., AlzeCure Pharma and Lipum AB go up and down completely randomly.

Pair Corralation between AlzeCure Pharma and Lipum AB

Assuming the 90 days trading horizon AlzeCure Pharma is expected to under-perform the Lipum AB. In addition to that, AlzeCure Pharma is 1.12 times more volatile than Lipum AB. It trades about -0.25 of its total potential returns per unit of risk. Lipum AB is currently generating about 0.17 per unit of volatility. If you would invest  1,170  in Lipum AB on August 31, 2024 and sell it today you would earn a total of  450.00  from holding Lipum AB or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AlzeCure Pharma  vs.  Lipum AB

AlzeCure Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlzeCure Pharma 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Lipum AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lipum AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AlzeCure Pharma and Lipum AB

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

The idea behind AlzeCure Pharma and Lipum 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.