Correlation Between Electrovaya Common and Lipocine

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

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

Diversification Opportunities for Electrovaya Common and Lipocine

-0.45

Correlation Coefficient

Electrovaya Common  Lipocine

Very good diversification

The 3 months correlation between Electrovaya and Lipocine is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Electrovaya Common 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 Electrovaya Common Shares 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 Electrovaya Common i.e., Electrovaya Common and Lipocine go up and down completely randomly.

Pair Corralation between Electrovaya Common and Lipocine

Given the investment horizon of 90 days Electrovaya Common Shares is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Electrovaya Common Shares is 1.46 times less risky than Lipocine. The stock trades about -0.01 of its potential returns per unit of risk. The Lipocine is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Lipocine on October 4, 2024 and sell it today you would lose (458.00) from holding Lipocine or give up 48.41% of portfolio value over 90 days.

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

Electrovaya Common Shares  vs.  Lipocine

Electrovaya Common Shares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Electrovaya Common 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 weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Electrovaya Common and Lipocine

The main advantage of trading using opposite Electrovaya Common and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrovaya Common 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 Electrovaya Common Shares 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.