Correlation Between Lipocine and Portmeirion Group

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

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

Diversification Opportunities for Lipocine and Portmeirion Group

0.83

Correlation Coefficient

Lipocine  Portmeirion Group

Very poor diversification

The 3 months correlation between Lipocine and Portmeirion is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Portmeirion Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portmeirion Group PLC 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 Portmeirion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portmeirion Group PLC has no effect on the direction of Lipocine i.e., Lipocine and Portmeirion Group go up and down completely randomly.

Pair Corralation between Lipocine and Portmeirion Group

Given the investment horizon of 90 days Lipocine is expected to generate 2.05 times more return on investment than Portmeirion Group. However, Lipocine is 2.05 times more volatile than Portmeirion Group PLC. It trades about -0.03 of its potential returns per unit of risk. Portmeirion Group PLC is currently generating about -0.09 per unit of risk. If you would invest  433.00  in Lipocine on December 30, 2024 and sell it today you would lose (105.00) from holding Lipocine or give up 24.25% of portfolio value over 90 days.

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

Lipocine  vs.  Portmeirion Group PLC

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.

Portmeirion Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Portmeirion Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary 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 Portmeirion Group

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

The idea behind Lipocine and Portmeirion Group PLC 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.