Correlation Between Lipocine and Safety Shot

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

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

Diversification Opportunities for Lipocine and Safety Shot

-0.51

Correlation Coefficient

Lipocine  Safety Shot

Excellent diversification

The 3 months correlation between Lipocine and Safety is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Lipocine i.e., Lipocine and Safety Shot go up and down completely randomly.

Pair Corralation between Lipocine and Safety Shot

Given the investment horizon of 90 days Lipocine is expected to under-perform the Safety Shot. But the stock apears to be less risky and, when comparing its historical volatility, Lipocine is 8.5 times less risky than Safety Shot. The stock trades about -0.34 of its potential returns per unit of risk. The Safety Shot is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Safety Shot on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Safety Shot or generate 63.64% return on investment over 90 days.

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

Lipocine  vs.  Safety Shot

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.

Safety Shot

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Shot are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Safety Shot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and Safety Shot

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

The idea behind Lipocine and Safety Shot 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.