Correlation Between Lipocine and Daiwa Securities

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

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

Diversification Opportunities for Lipocine and Daiwa Securities

-0.19

Correlation Coefficient

Lipocine  Daiwa Securities

Good diversification

The 3 months correlation between Lipocine and Daiwa is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities 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 Daiwa Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa Securities has no effect on the direction of Lipocine i.e., Lipocine and Daiwa Securities go up and down completely randomly.

Pair Corralation between Lipocine and Daiwa Securities

Given the investment horizon of 90 days Lipocine is expected to under-perform the Daiwa Securities. In addition to that, Lipocine is 2.48 times more volatile than Daiwa Securities Group. It trades about -0.01 of its total potential returns per unit of risk. Daiwa Securities Group is currently generating about -0.01 per unit of volatility. If you would invest  697.00  in Daiwa Securities Group on September 28, 2024 and sell it today you would lose (47.00) from holding Daiwa Securities Group or give up 6.74% of portfolio value over 90 days.

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

Lipocine  vs.  Daiwa Securities Group

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.

Daiwa Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiwa Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lipocine and Daiwa Securities

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

The idea behind Lipocine and Daiwa Securities Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.