Correlation Between Lipocine and Emergent Biosolutions

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

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

Diversification Opportunities for Lipocine and Emergent Biosolutions

0.34

Correlation Coefficient

Lipocine  Emergent Biosolutions

Weak diversification

The 3 months correlation between Lipocine and Emergent is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions 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 Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of Lipocine i.e., Lipocine and Emergent Biosolutions go up and down completely randomly.

Pair Corralation between Lipocine and Emergent Biosolutions

Given the investment horizon of 90 days Lipocine is expected to under-perform the Emergent Biosolutions. But the stock apears to be less risky and, when comparing its historical volatility, Lipocine is 1.06 times less risky than Emergent Biosolutions. The stock trades about -0.19 of its potential returns per unit of risk. The Emergent Biosolutions is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  943.00  in Emergent Biosolutions on December 4, 2024 and sell it today you would lose (260.00) from holding Emergent Biosolutions or give up 27.57% of portfolio value over 90 days.

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

Lipocine  vs.  Emergent Biosolutions

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.

Emergent Biosolutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emergent Biosolutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lipocine and Emergent Biosolutions

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

The idea behind Lipocine and Emergent Biosolutions 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.