Correlation Between Coda Octopus and Lipocine

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

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

Diversification Opportunities for Coda Octopus and Lipocine

0.27

Correlation Coefficient

Coda Octopus  Lipocine

Modest diversification

The 3 months correlation between Coda and Lipocine is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Coda Octopus 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 Coda Octopus Group 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 Coda Octopus i.e., Coda Octopus and Lipocine go up and down completely randomly.

Pair Corralation between Coda Octopus and Lipocine

Given the investment horizon of 90 days Coda Octopus Group is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Coda Octopus Group is 1.83 times less risky than Lipocine. The stock trades about -0.23 of its potential returns per unit of risk. The Lipocine is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  501.00  in Lipocine on September 24, 2024 and sell it today you would lose (14.00) from holding Lipocine or give up 2.79% of portfolio value over 90 days.

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

Coda Octopus Group  vs.  Lipocine

Coda Octopus Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coda Octopus and Lipocine

The main advantage of trading using opposite Coda Octopus and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus 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 Coda Octopus Group 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.