Correlation Between Development Technologies and Lipocine

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

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

Diversification Opportunities for Development Technologies and Lipocine

0.14

Correlation Coefficient

Development Technologies  Lipocine

Average diversification

The 3 months correlation between Development and Lipocine is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Development Technologies Corp and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Development Technologies 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 Development Technologies Corp 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 Development Technologies i.e., Development Technologies and Lipocine go up and down completely randomly.

Pair Corralation between Development Technologies and Lipocine

Given the investment horizon of 90 days Development Technologies Corp is expected to generate 1.98 times more return on investment than Lipocine. However, Development Technologies is 1.98 times more volatile than Lipocine. It trades about 0.18 of its potential returns per unit of risk. Lipocine is currently generating about 0.04 per unit of risk. If you would invest  375.00  in Development Technologies Corp on September 26, 2024 and sell it today you would earn a total of  537.00  from holding Development Technologies Corp or generate 143.2% return on investment over 90 days.

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

Development Technologies Corp  vs.  Lipocine

Development Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Development Technologies Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Development Technologies exhibited 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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Development Technologies and Lipocine

The main advantage of trading using opposite Development Technologies and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development Technologies 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 Development Technologies Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.