Correlation Between Camurus AB and Lipigon Pharmaceuticals

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

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

Diversification Opportunities for Camurus AB and Lipigon Pharmaceuticals

-0.04

Correlation Coefficient

Camurus AB  Lipigon Pharmaceuticals

Good diversification

The 3 months correlation between Camurus and Lipigon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Camurus AB and Lipigon Pharmaceuticals AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipigon Pharmaceuticals and Camurus AB 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 Camurus AB are associated (or correlated) with Lipigon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipigon Pharmaceuticals has no effect on the direction of Camurus AB i.e., Camurus AB and Lipigon Pharmaceuticals go up and down completely randomly.

Pair Corralation between Camurus AB and Lipigon Pharmaceuticals

Assuming the 90 days trading horizon Camurus AB is expected to generate 11.24 times less return on investment than Lipigon Pharmaceuticals. But when comparing it to its historical volatility, Camurus AB is 4.85 times less risky than Lipigon Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Lipigon Pharmaceuticals AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Lipigon Pharmaceuticals AB on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Lipigon Pharmaceuticals AB or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Camurus AB  vs.  Lipigon Pharmaceuticals AB

Camurus AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camurus AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Camurus AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Lipigon Pharmaceuticals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipigon Pharmaceuticals AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lipigon Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Camurus AB and Lipigon Pharmaceuticals

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

The idea behind Camurus AB and Lipigon Pharmaceuticals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.