Correlation Between Lipocine and RadNet

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

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

Diversification Opportunities for Lipocine and RadNet

-0.5

Correlation Coefficient

Lipocine  RadNet

Very good diversification

The 3 months correlation between Lipocine and RadNet is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Lipocine i.e., Lipocine and RadNet go up and down completely randomly.

Pair Corralation between Lipocine and RadNet

Given the investment horizon of 90 days Lipocine is expected to generate 2.06 times more return on investment than RadNet. However, Lipocine is 2.06 times more volatile than RadNet Inc. It trades about -0.01 of its potential returns per unit of risk. RadNet Inc is currently generating about -0.34 per unit of risk. If you would invest  499.00  in Lipocine on October 15, 2024 and sell it today you would lose (10.00) from holding Lipocine or give up 2.0% of portfolio value over 90 days.

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

Lipocine  vs.  RadNet Inc

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.

RadNet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RadNet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RadNet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lipocine and RadNet

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

The idea behind Lipocine and RadNet Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.