Correlation Between GAMCO Global and Lipocine

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

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

Diversification Opportunities for GAMCO Global and Lipocine

-0.28

Correlation Coefficient

GAMCO Global  Lipocine

Very good diversification

The 3 months correlation between GAMCO and Lipocine is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Global Gold and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and GAMCO Global 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 GAMCO Global Gold 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 GAMCO Global i.e., GAMCO Global and Lipocine go up and down completely randomly.

Pair Corralation between GAMCO Global and Lipocine

Assuming the 90 days trading horizon GAMCO Global Gold is expected to under-perform the Lipocine. But the preferred stock apears to be less risky and, when comparing its historical volatility, GAMCO Global Gold is 4.44 times less risky than Lipocine. The preferred stock trades about -0.15 of its potential returns per unit of risk. The Lipocine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  483.00  in Lipocine on September 17, 2024 and sell it today you would earn a total of  19.00  from holding Lipocine or generate 3.93% return on investment over 90 days.

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

GAMCO Global Gold  vs.  Lipocine

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred 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

2 of 100

Insignificant

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 uncertain fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GAMCO Global and Lipocine

The main advantage of trading using opposite GAMCO Global and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMCO Global 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 GAMCO Global Gold 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.