Correlation Between Lipocine and JD Sports

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

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

Diversification Opportunities for Lipocine and JD Sports

0.78

Correlation Coefficient

Lipocine  JD Sports

Poor diversification

The 3 months correlation between Lipocine and JDSPY is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Lipocine i.e., Lipocine and JD Sports go up and down completely randomly.

Pair Corralation between Lipocine and JD Sports

Given the investment horizon of 90 days Lipocine is expected to under-perform the JD Sports. In addition to that, Lipocine is 1.26 times more volatile than JD Sports Fashion. It trades about -0.11 of its total potential returns per unit of risk. JD Sports Fashion is currently generating about -0.1 per unit of volatility. If you would invest  111.00  in JD Sports Fashion on December 29, 2024 and sell it today you would lose (23.00) from holding JD Sports Fashion or give up 20.72% of portfolio value over 90 days.

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

Lipocine  vs.  JD Sports Fashion

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.

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lipocine and JD Sports

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

The idea behind Lipocine and JD Sports Fashion 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.