Correlation Between Lipocine and SunOpta

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

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

Diversification Opportunities for Lipocine and SunOpta

-0.25

Correlation Coefficient

Lipocine  SunOpta

Very good diversification

The 3 months correlation between Lipocine and SunOpta is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Lipocine i.e., Lipocine and SunOpta go up and down completely randomly.

Pair Corralation between Lipocine and SunOpta

Given the investment horizon of 90 days Lipocine is expected to under-perform the SunOpta. In addition to that, Lipocine is 2.81 times more volatile than SunOpta. It trades about 0.0 of its total potential returns per unit of risk. SunOpta is currently generating about 0.02 per unit of volatility. If you would invest  770.00  in SunOpta on September 22, 2024 and sell it today you would earn a total of  3.00  from holding SunOpta or generate 0.39% return on investment over 90 days.

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

Lipocine  vs.  SunOpta

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 uncertain fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

SunOpta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and SunOpta

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

The idea behind Lipocine and SunOpta 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.