Correlation Between Lipocine and Paya Holdings

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

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

Diversification Opportunities for Lipocine and Paya Holdings

0.16

Correlation Coefficient

Lipocine  Paya Holdings

Average diversification

The 3 months correlation between Lipocine and Paya is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Paya Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paya Holdings 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 Paya Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paya Holdings has no effect on the direction of Lipocine i.e., Lipocine and Paya Holdings go up and down completely randomly.

Pair Corralation between Lipocine and Paya Holdings

If you would invest  508.00  in Lipocine on October 15, 2024 and sell it today you would lose (19.00) from holding Lipocine or give up 3.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lipocine  vs.  Paya Holdings

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 newest stock price disarray, may contribute to short-term losses for the investors.

Paya Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paya Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Paya Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and Paya Holdings

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

The idea behind Lipocine and Paya Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.