Correlation Between Borr Drilling and Lipocine

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

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

Diversification Opportunities for Borr Drilling and Lipocine

0.9

Correlation Coefficient

Borr Drilling  Lipocine

Almost no diversification

The 3 months correlation between Borr and Lipocine is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Borr Drilling and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Borr Drilling 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 Borr Drilling 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 Borr Drilling i.e., Borr Drilling and Lipocine go up and down completely randomly.

Pair Corralation between Borr Drilling and Lipocine

Given the investment horizon of 90 days Borr Drilling is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Borr Drilling is 1.2 times less risky than Lipocine. The stock trades about -0.21 of its potential returns per unit of risk. The Lipocine is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  468.00  in Lipocine on December 19, 2024 and sell it today you would lose (123.00) from holding Lipocine or give up 26.28% of portfolio value over 90 days.

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

Borr Drilling  vs.  Lipocine

Borr Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Borr Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Lipocine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lipocine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Borr Drilling and Lipocine

The main advantage of trading using opposite Borr Drilling and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borr Drilling 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 Borr Drilling 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.