Correlation Between Grocery Outlet and Lipocine

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

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

Diversification Opportunities for Grocery Outlet and Lipocine

-0.38

Correlation Coefficient

Grocery Outlet  Lipocine

Very good diversification

The 3 months correlation between Grocery and Lipocine is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Lipocine go up and down completely randomly.

Pair Corralation between Grocery Outlet and Lipocine

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.04 times less risky than Lipocine. The stock trades about -0.26 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  491.00  in Lipocine on October 5, 2024 and sell it today you would lose (5.00) from holding Lipocine or give up 1.02% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  Lipocine

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Weak

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

The main advantage of trading using opposite Grocery Outlet and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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 Grocery Outlet Holding 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.