Correlation Between Lipocine and MSP Recovery

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

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

Diversification Opportunities for Lipocine and MSP Recovery

-0.46

Correlation Coefficient

Lipocine  MSP Recovery

Very good diversification

The 3 months correlation between Lipocine and MSP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery 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 MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Lipocine i.e., Lipocine and MSP Recovery go up and down completely randomly.

Pair Corralation between Lipocine and MSP Recovery

Given the investment horizon of 90 days Lipocine is expected to generate 13.42 times less return on investment than MSP Recovery. But when comparing it to its historical volatility, Lipocine is 11.63 times less risky than MSP Recovery. It trades about 0.05 of its potential returns per unit of risk. MSP Recovery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  129.00  in MSP Recovery on October 9, 2024 and sell it today you would earn a total of  110.00  from holding MSP Recovery or generate 85.27% 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.  MSP Recovery

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.

MSP Recovery

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MSP Recovery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, MSP Recovery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and MSP Recovery

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

The idea behind Lipocine and MSP Recovery 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 Anywhere module to track or share privately all of your investments from the convenience of any device.