Correlation Between Lipocine and Renalytix

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

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

Diversification Opportunities for Lipocine and Renalytix

-0.67

Correlation Coefficient

Lipocine  Renalytix

Excellent diversification

The 3 months correlation between Lipocine and Renalytix is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Renalytix AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renalytix AI 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 Renalytix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renalytix AI has no effect on the direction of Lipocine i.e., Lipocine and Renalytix go up and down completely randomly.

Pair Corralation between Lipocine and Renalytix

Given the investment horizon of 90 days Lipocine is expected to generate 0.78 times more return on investment than Renalytix. However, Lipocine is 1.28 times less risky than Renalytix. It trades about 0.1 of its potential returns per unit of risk. Renalytix AI is currently generating about -0.16 per unit of risk. If you would invest  374.00  in Lipocine on September 5, 2024 and sell it today you would earn a total of  99.00  from holding Lipocine or generate 26.47% return on investment over 90 days.

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

Lipocine  vs.  Renalytix AI

Lipocine

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Renalytix AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renalytix AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lipocine and Renalytix

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

The idea behind Lipocine and Renalytix AI 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.