Correlation Between Lipocine and Dolphin Entertainment

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

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

Diversification Opportunities for Lipocine and Dolphin Entertainment

0.09

Correlation Coefficient

Lipocine  Dolphin Entertainment

Significant diversification

The 3 months correlation between Lipocine and Dolphin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment 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 Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Lipocine i.e., Lipocine and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Lipocine and Dolphin Entertainment

Given the investment horizon of 90 days Lipocine is expected to generate 0.99 times more return on investment than Dolphin Entertainment. However, Lipocine is 1.01 times less risky than Dolphin Entertainment. It trades about -0.06 of its potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.08 per unit of risk. If you would invest  815.00  in Lipocine on September 23, 2024 and sell it today you would lose (328.00) from holding Lipocine or give up 40.25% of portfolio value over 90 days.

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

Lipocine  vs.  Dolphin Entertainment

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

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

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Lipocine and Dolphin Entertainment

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

The idea behind Lipocine and Dolphin Entertainment 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.