Correlation Between Lipocine and Energy

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

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

Diversification Opportunities for Lipocine and Energy

-0.1

Correlation Coefficient

Lipocine  Energy

Good diversification

The 3 months correlation between Lipocine and Energy is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Energy and Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Environmental 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Environmental has no effect on the direction of Lipocine i.e., Lipocine and Energy go up and down completely randomly.

Pair Corralation between Lipocine and Energy

Given the investment horizon of 90 days Lipocine is expected to generate 2.98 times less return on investment than Energy. But when comparing it to its historical volatility, Lipocine is 1.43 times less risky than Energy. It trades about 0.01 of its potential returns per unit of risk. Energy and Environmental is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Energy and Environmental on October 11, 2024 and sell it today you would lose (11.00) from holding Energy and Environmental or give up 61.11% of portfolio value over 90 days.

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

Lipocine  vs.  Energy and Environmental

Lipocine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Energy and Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy and Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lipocine and Energy

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

The idea behind Lipocine and Energy and Environmental 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..