Correlation Between Pasithea Therapeutics and Lipocine

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

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

Diversification Opportunities for Pasithea Therapeutics and Lipocine

-0.38

Correlation Coefficient

Pasithea Therapeutics  Lipocine

Very good diversification

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

Pair Corralation between Pasithea Therapeutics and Lipocine

Assuming the 90 days horizon Pasithea Therapeutics Corp is expected to generate 7.77 times more return on investment than Lipocine. However, Pasithea Therapeutics is 7.77 times more volatile than Lipocine. It trades about 0.11 of its potential returns per unit of risk. Lipocine is currently generating about 0.17 per unit of risk. If you would invest  2.01  in Pasithea Therapeutics Corp on October 3, 2024 and sell it today you would earn a total of  0.00  from holding Pasithea Therapeutics Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Pasithea Therapeutics Corp  vs.  Lipocine

Pasithea Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pasithea Therapeutics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lipocine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pasithea Therapeutics and Lipocine

The main advantage of trading using opposite Pasithea Therapeutics and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pasithea Therapeutics 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 Pasithea Therapeutics Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.