Correlation Between Lipocine and Neogen

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

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

Diversification Opportunities for Lipocine and Neogen

0.87

Correlation Coefficient

Lipocine  Neogen

Very poor diversification

The 3 months correlation between Lipocine and Neogen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Lipocine i.e., Lipocine and Neogen go up and down completely randomly.

Pair Corralation between Lipocine and Neogen

Given the investment horizon of 90 days Lipocine is expected to generate 1.62 times more return on investment than Neogen. However, Lipocine is 1.62 times more volatile than Neogen. It trades about -0.11 of its potential returns per unit of risk. Neogen is currently generating about -0.19 per unit of risk. If you would invest  430.00  in Lipocine on December 1, 2024 and sell it today you would lose (123.00) from holding Lipocine or give up 28.6% of portfolio value over 90 days.

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

Lipocine  vs.  Neogen

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.

Neogen

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lipocine and Neogen

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

The idea behind Lipocine and Neogen 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.