Correlation Between Lipocine and Royalty Management

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

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

Diversification Opportunities for Lipocine and Royalty Management

-0.34

Correlation Coefficient

Lipocine  Royalty Management

Very good diversification

The 3 months correlation between Lipocine and Royalty is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Lipocine i.e., Lipocine and Royalty Management go up and down completely randomly.

Pair Corralation between Lipocine and Royalty Management

Given the investment horizon of 90 days Lipocine is expected to under-perform the Royalty Management. In addition to that, Lipocine is 1.67 times more volatile than Royalty Management Holding. It trades about -0.35 of its total potential returns per unit of risk. Royalty Management Holding is currently generating about -0.32 per unit of volatility. If you would invest  117.00  in Royalty Management Holding on December 5, 2024 and sell it today you would lose (20.00) from holding Royalty Management Holding or give up 17.09% of portfolio value over 90 days.

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

Lipocine  vs.  Royalty Management Holding

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.

Royalty Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Royalty Management is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and Royalty Management

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

The idea behind Lipocine and Royalty Management Holding 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.