Correlation Between Lipocine and Sandstorm Gold

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

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

Diversification Opportunities for Lipocine and Sandstorm Gold

0.49

Correlation Coefficient

Lipocine  Sandstorm Gold

Very weak diversification

The 3 months correlation between Lipocine and Sandstorm is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Lipocine i.e., Lipocine and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Lipocine and Sandstorm Gold

Given the investment horizon of 90 days Lipocine is expected to generate 1.43 times less return on investment than Sandstorm Gold. In addition to that, Lipocine is 2.38 times more volatile than Sandstorm Gold Ltd. It trades about 0.0 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.01 per unit of volatility. If you would invest  574.00  in Sandstorm Gold Ltd on October 4, 2024 and sell it today you would lose (8.00) from holding Sandstorm Gold Ltd or give up 1.39% of portfolio value over 90 days.

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

Lipocine  vs.  Sandstorm Gold Ltd

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sandstorm Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lipocine and Sandstorm Gold

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

The idea behind Lipocine and Sandstorm Gold Ltd 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.