Correlation Between Lincoln Educational and Raphael Pharmaceutical

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Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Raphael Pharmaceutical 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 Lincoln Educational and Raphael Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln Educational Services and Raphael Pharmaceutical, you can compare the effects of market volatilities on Lincoln Educational and Raphael Pharmaceutical 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 Lincoln Educational with a short position of Raphael Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Raphael Pharmaceutical.

Diversification Opportunities for Lincoln Educational and Raphael Pharmaceutical

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Lincoln and Raphael is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Raphael Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphael Pharmaceutical and Lincoln Educational 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 Lincoln Educational Services are associated (or correlated) with Raphael Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphael Pharmaceutical has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Raphael Pharmaceutical go up and down completely randomly.

Pair Corralation between Lincoln Educational and Raphael Pharmaceutical

Given the investment horizon of 90 days Lincoln Educational Services is expected to under-perform the Raphael Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Lincoln Educational Services is 8.94 times less risky than Raphael Pharmaceutical. The stock trades about -0.21 of its potential returns per unit of risk. The Raphael Pharmaceutical is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Raphael Pharmaceutical on October 11, 2024 and sell it today you would earn a total of  49.00  from holding Raphael Pharmaceutical or generate 188.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Lincoln Educational Services  vs.  Raphael Pharmaceutical

 Performance 
       Timeline  
Lincoln Educational 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.
Raphael Pharmaceutical 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Raphael Pharmaceutical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Raphael Pharmaceutical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lincoln Educational and Raphael Pharmaceutical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lincoln Educational and Raphael Pharmaceutical

The main advantage of trading using opposite Lincoln Educational and Raphael Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, Raphael Pharmaceutical 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 Raphael Pharmaceutical will offset losses from the drop in Raphael Pharmaceutical's long position.
The idea behind Lincoln Educational Services and Raphael Pharmaceutical 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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