Correlation Between ImmuCell and Lipella Pharmaceuticals

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

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

Diversification Opportunities for ImmuCell and Lipella Pharmaceuticals

0.21

Correlation Coefficient

ImmuCell  Lipella Pharmaceuticals

Modest diversification

The 3 months correlation between ImmuCell and Lipella is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ImmuCell and Lipella Pharmaceuticals Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipella Pharmaceuticals and ImmuCell 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 ImmuCell are associated (or correlated) with Lipella Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipella Pharmaceuticals has no effect on the direction of ImmuCell i.e., ImmuCell and Lipella Pharmaceuticals go up and down completely randomly.

Pair Corralation between ImmuCell and Lipella Pharmaceuticals

Given the investment horizon of 90 days ImmuCell is expected to generate 1.34 times less return on investment than Lipella Pharmaceuticals. But when comparing it to its historical volatility, ImmuCell is 3.02 times less risky than Lipella Pharmaceuticals. It trades about 0.11 of its potential returns per unit of risk. Lipella Pharmaceuticals Common is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Lipella Pharmaceuticals Common on December 2, 2024 and sell it today you would lose (12.00) from holding Lipella Pharmaceuticals Common or give up 3.93% of portfolio value over 90 days.

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

ImmuCell  vs.  Lipella Pharmaceuticals Common

ImmuCell

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ImmuCell are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, ImmuCell exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lipella Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipella Pharmaceuticals Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lipella Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ImmuCell and Lipella Pharmaceuticals

The main advantage of trading using opposite ImmuCell and Lipella Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ImmuCell position performs unexpectedly, Lipella Pharmaceuticals 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 Lipella Pharmaceuticals will offset losses from the drop in Lipella Pharmaceuticals' long position.

The idea behind ImmuCell and Lipella Pharmaceuticals Common 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.