Correlation Between Lipocine and AUTONATION

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

By analyzing existing cross correlation between Lipocine and AUTONATION INC 38, you can compare the effects of market volatilities on Lipocine and AUTONATION 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 AUTONATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and AUTONATION.

Diversification Opportunities for Lipocine and AUTONATION

-0.77

Correlation Coefficient

Lipocine  AUTONATION

Pay attention - limited upside

The 3 months correlation between Lipocine and AUTONATION is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and AUTONATION INC 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTONATION INC 38 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 AUTONATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTONATION INC 38 has no effect on the direction of Lipocine i.e., Lipocine and AUTONATION go up and down completely randomly.

Pair Corralation between Lipocine and AUTONATION

Given the investment horizon of 90 days Lipocine is expected to under-perform the AUTONATION. In addition to that, Lipocine is 5.88 times more volatile than AUTONATION INC 38. It trades about -0.09 of its total potential returns per unit of risk. AUTONATION INC 38 is currently generating about -0.08 per unit of volatility. If you would invest  9,639  in AUTONATION INC 38 on December 26, 2024 and sell it today you would lose (281.00) from holding AUTONATION INC 38 or give up 2.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.33%
Values	Daily Returns

Lipocine  vs.  AUTONATION INC 38

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.

AUTONATION INC 38

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUTONATION INC 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AUTONATION is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and AUTONATION

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

The idea behind Lipocine and AUTONATION INC 38 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.