Correlation Between Lipocine and Corporacion America

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

By analyzing existing cross correlation between Lipocine and Corporacion America Airports, you can compare the effects of market volatilities on Lipocine and Corporacion America 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 Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and Corporacion America.

Diversification Opportunities for Lipocine and Corporacion America

0.49

Correlation Coefficient

Lipocine  Corporacion America

Very weak diversification

The 3 months correlation between Lipocine and Corporacion is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Lipocine i.e., Lipocine and Corporacion America go up and down completely randomly.

Pair Corralation between Lipocine and Corporacion America

Given the investment horizon of 90 days Lipocine is expected to under-perform the Corporacion America. In addition to that, Lipocine is 1.72 times more volatile than Corporacion America Airports. It trades about -0.19 of its total potential returns per unit of risk. Corporacion America Airports is currently generating about -0.07 per unit of volatility. If you would invest  1,975  in Corporacion America Airports on December 5, 2024 and sell it today you would lose (215.00) from holding Corporacion America Airports or give up 10.89% of portfolio value over 90 days.

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

Lipocine  vs.  Corporacion America Airports

Lipocine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lipocine 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Corporacion America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporacion America Airports has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Lipocine and Corporacion America

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

The idea behind Lipocine and Corporacion America Airports 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.