Correlation Between Lipocine and Estrella Immunopharma

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

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

Diversification Opportunities for Lipocine and Estrella Immunopharma

-0.41

Correlation Coefficient

Lipocine  Estrella Immunopharma

Very good diversification

The 3 months correlation between Lipocine and Estrella is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Estrella Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estrella Immunopharma 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 Estrella Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estrella Immunopharma has no effect on the direction of Lipocine i.e., Lipocine and Estrella Immunopharma go up and down completely randomly.

Pair Corralation between Lipocine and Estrella Immunopharma

Given the investment horizon of 90 days Lipocine is expected to generate 3.02 times less return on investment than Estrella Immunopharma. But when comparing it to its historical volatility, Lipocine is 1.44 times less risky than Estrella Immunopharma. It trades about 0.04 of its potential returns per unit of risk. Estrella Immunopharma is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Estrella Immunopharma on September 15, 2024 and sell it today you would earn a total of  26.00  from holding Estrella Immunopharma or generate 26.8% return on investment over 90 days.

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

Lipocine  vs.  Estrella Immunopharma

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

Estrella Immunopharma

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Estrella Immunopharma are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent essential indicators, Estrella Immunopharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and Estrella Immunopharma

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

The idea behind Lipocine and Estrella Immunopharma 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 CEOs Directory module to screen CEOs from public companies around the world.