Correlation Between Lipocine and Armm

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

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

Diversification Opportunities for Lipocine and Armm

0.0

Correlation Coefficient

Lipocine  Armm

Pay attention - limited upside

The 3 months correlation between Lipocine and Armm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Armm Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armm Inc and Lipocine 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 Lipocine are associated (or correlated) with Armm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armm Inc has no effect on the direction of Lipocine i.e., Lipocine and Armm go up and down completely randomly.

Pair Corralation between Lipocine and Armm

Given the investment horizon of 90 days Lipocine is expected to generate 254.56 times less return on investment than Armm. But when comparing it to its historical volatility, Lipocine is 8.46 times less risky than Armm. It trades about 0.0 of its potential returns per unit of risk. Armm Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Armm Inc on October 5, 2024 and sell it today you would lose (50.91) from holding Armm Inc or give up 99.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Lipocine  vs.  Armm Inc

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.

Armm Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armm Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Armm is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and Armm

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

The idea behind Lipocine and Armm Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.