Correlation Between Lipocine and Harmony Biosciences

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

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

Diversification Opportunities for Lipocine and Harmony Biosciences

0.33

Correlation Coefficient

Lipocine  Harmony Biosciences

Weak diversification

The 3 months correlation between Lipocine and Harmony is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Harmony Biosciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Biosciences 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 Harmony Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Biosciences has no effect on the direction of Lipocine i.e., Lipocine and Harmony Biosciences go up and down completely randomly.

Pair Corralation between Lipocine and Harmony Biosciences

Given the investment horizon of 90 days Lipocine is expected to under-perform the Harmony Biosciences. In addition to that, Lipocine is 1.39 times more volatile than Harmony Biosciences Holdings. It trades about -0.11 of its total potential returns per unit of risk. Harmony Biosciences Holdings is currently generating about 0.0 per unit of volatility. If you would invest  3,406  in Harmony Biosciences Holdings on December 30, 2024 and sell it today you would lose (87.00) from holding Harmony Biosciences Holdings or give up 2.55% 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.  Harmony Biosciences Holdings

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.

Harmony Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harmony Biosciences Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Harmony Biosciences is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and Harmony Biosciences

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

The idea behind Lipocine and Harmony Biosciences Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.