Correlation Between Lipocine and Electrovaya Common

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

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

Diversification Opportunities for Lipocine and Electrovaya Common

-0.45

Correlation Coefficient

Lipocine  Electrovaya Common

Very good diversification

The 3 months correlation between Lipocine and Electrovaya is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares 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 Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Lipocine i.e., Lipocine and Electrovaya Common go up and down completely randomly.

Pair Corralation between Lipocine and Electrovaya Common

Given the investment horizon of 90 days Lipocine is expected to generate 1.46 times more return on investment than Electrovaya Common. However, Lipocine is 1.46 times more volatile than Electrovaya Common Shares. It trades about 0.0 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about -0.01 per unit of risk. If you would invest  946.00  in Lipocine on October 4, 2024 and sell it today you would lose (458.00) from holding Lipocine or give up 48.41% of portfolio value over 90 days.

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

Lipocine  vs.  Electrovaya Common Shares

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 weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Electrovaya Common Shares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and Electrovaya Common

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

The idea behind Lipocine and Electrovaya Common Shares 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.