Correlation Between Copa Holdings and Lipocine

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

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

Diversification Opportunities for Copa Holdings and Lipocine

0.34

Correlation Coefficient

Copa Holdings  Lipocine

Weak diversification

The 3 months correlation between Copa and Lipocine is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Copa Holdings 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 Copa Holdings SA 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 Copa Holdings i.e., Copa Holdings and Lipocine go up and down completely randomly.

Pair Corralation between Copa Holdings and Lipocine

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.35 times more return on investment than Lipocine. However, Copa Holdings SA is 2.84 times less risky than Lipocine. It trades about 0.01 of its potential returns per unit of risk. Lipocine is currently generating about 0.0 per unit of risk. If you would invest  8,277  in Copa Holdings SA on October 5, 2024 and sell it today you would earn a total of  294.00  from holding Copa Holdings SA or generate 3.55% return on investment over 90 days.

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

Copa Holdings SA  vs.  Lipocine

Copa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lipocine

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Lipocine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Copa Holdings and Lipocine

The main advantage of trading using opposite Copa Holdings and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings 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 Copa Holdings SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.