Correlation Between Lipocine and Oric Pharmaceuticals

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

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

Diversification Opportunities for Lipocine and Oric Pharmaceuticals

-0.27

Correlation Coefficient

Lipocine  Oric Pharmaceuticals

Very good diversification

The 3 months correlation between Lipocine and Oric is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Oric Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oric Pharmaceuticals 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 Oric Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oric Pharmaceuticals has no effect on the direction of Lipocine i.e., Lipocine and Oric Pharmaceuticals go up and down completely randomly.

Pair Corralation between Lipocine and Oric Pharmaceuticals

Given the investment horizon of 90 days Lipocine is expected to generate 1.35 times more return on investment than Oric Pharmaceuticals. However, Lipocine is 1.35 times more volatile than Oric Pharmaceuticals. It trades about -0.03 of its potential returns per unit of risk. Oric Pharmaceuticals is currently generating about -0.19 per unit of risk. If you would invest  515.00  in Lipocine on September 23, 2024 and sell it today you would lose (28.00) from holding Lipocine or give up 5.44% of portfolio value over 90 days.

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

Lipocine  vs.  Oric Pharmaceuticals

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Oric Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oric Pharmaceuticals 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 forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lipocine and Oric Pharmaceuticals

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

The idea behind Lipocine and Oric Pharmaceuticals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.