Correlation Between Lipocine and Everus Construction

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

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

Diversification Opportunities for Lipocine and Everus Construction

-0.5

Correlation Coefficient

Lipocine  Everus Construction

Very good diversification

The 3 months correlation between Lipocine and Everus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of Lipocine i.e., Lipocine and Everus Construction go up and down completely randomly.

Pair Corralation between Lipocine and Everus Construction

Given the investment horizon of 90 days Lipocine is expected to under-perform the Everus Construction. In addition to that, Lipocine is 1.25 times more volatile than Everus Construction Group. It trades about -0.07 of its total potential returns per unit of risk. Everus Construction Group is currently generating about -0.08 per unit of volatility. If you would invest  6,880  in Everus Construction Group on October 13, 2024 and sell it today you would lose (413.00) from holding Everus Construction Group or give up 6.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Lipocine  vs.  Everus Construction Group

Lipocine

Risk-Adjusted Performance

0 of 100

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 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.

Everus Construction

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and Everus Construction

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

The idea behind Lipocine and Everus Construction 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.