Correlation Between Everus Construction and Lipocine

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

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

Diversification Opportunities for Everus Construction and Lipocine

-0.5

Correlation Coefficient

Everus Construction  Lipocine

Very good diversification

The 3 months correlation between Everus and Lipocine is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Everus Construction 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 Everus Construction 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 Everus Construction i.e., Everus Construction and Lipocine go up and down completely randomly.

Pair Corralation between Everus Construction and Lipocine

Considering the 90-day investment horizon Everus Construction Group is expected to generate 0.78 times more return on investment than Lipocine. However, Everus Construction Group is 1.28 times less risky than Lipocine. It trades about 0.25 of its potential returns per unit of risk. Lipocine is currently generating about 0.03 per unit of risk. If you would invest  4,900  in Everus Construction Group on September 25, 2024 and sell it today you would earn a total of  1,980  from holding Everus Construction Group or generate 40.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.49%
Values	Daily Returns

Everus Construction Group  vs.  Lipocine

Everus Construction

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Lipocine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) 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 Everus Construction and Lipocine

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

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.