Correlation Between Lipocine and Thor Industries

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

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

Diversification Opportunities for Lipocine and Thor Industries

-0.06

Correlation Coefficient

Lipocine  Thor Industries

Good diversification

The 3 months correlation between Lipocine and Thor is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Lipocine i.e., Lipocine and Thor Industries go up and down completely randomly.

Pair Corralation between Lipocine and Thor Industries

Given the investment horizon of 90 days Lipocine is expected to generate 2.57 times more return on investment than Thor Industries. However, Lipocine is 2.57 times more volatile than Thor Industries. It trades about 0.07 of its potential returns per unit of risk. Thor Industries is currently generating about -0.02 per unit of risk. If you would invest  293.00  in Lipocine on September 18, 2024 and sell it today you would earn a total of  209.00  from holding Lipocine or generate 71.33% return on investment over 90 days.

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

Lipocine  vs.  Thor Industries

Lipocine

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thor Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Thor Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and Thor Industries

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

The idea behind Lipocine and Thor Industries 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.