Correlation Between Lipocine and Morgan Advanced

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

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

Diversification Opportunities for Lipocine and Morgan Advanced

0.15

Correlation Coefficient

Lipocine  Morgan Advanced

Average diversification

The 3 months correlation between Lipocine and Morgan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Lipocine i.e., Lipocine and Morgan Advanced go up and down completely randomly.

Pair Corralation between Lipocine and Morgan Advanced

Given the investment horizon of 90 days Lipocine is expected to generate 2.16 times more return on investment than Morgan Advanced. However, Lipocine is 2.16 times more volatile than Morgan Advanced Materials. It trades about -0.02 of its potential returns per unit of risk. Morgan Advanced Materials is currently generating about -0.23 per unit of risk. If you would invest  515.00  in Lipocine on October 8, 2024 and sell it today you would lose (15.00) from holding Lipocine or give up 2.91% of portfolio value over 90 days.

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

Lipocine  vs.  Morgan Advanced Materials

Lipocine

Risk-Adjusted Performance

0 of 100

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 very healthy fundamental indicators, Lipocine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lipocine and Morgan Advanced

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

The idea behind Lipocine and Morgan Advanced Materials 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.