Correlation Between Lipocine and 98385XAM8

Can any of the company-specific risk be diversified away by investing in both Lipocine and 98385XAM8 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 98385XAM8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lipocine and XTO ENERGY INC, you can compare the effects of market volatilities on Lipocine and 98385XAM8 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 98385XAM8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and 98385XAM8.

Diversification Opportunities for Lipocine and 98385XAM8

0.63

Correlation Coefficient

Lipocine  98385XAM8

Poor diversification

The 3 months correlation between Lipocine and 98385XAM8 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and XTO ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTO ENERGY INC 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 98385XAM8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTO ENERGY INC has no effect on the direction of Lipocine i.e., Lipocine and 98385XAM8 go up and down completely randomly.

Pair Corralation between Lipocine and 98385XAM8

Given the investment horizon of 90 days Lipocine is expected to generate 105.8 times less return on investment than 98385XAM8. But when comparing it to its historical volatility, Lipocine is 12.0 times less risky than 98385XAM8. It trades about 0.01 of its potential returns per unit of risk. XTO ENERGY INC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11,692  in XTO ENERGY INC on October 11, 2024 and sell it today you would lose (150.00) from holding XTO ENERGY INC or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	47.58%
Values	Daily Returns

Lipocine  vs.  XTO ENERGY INC

Lipocine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) 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 February 2025.

XTO ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTO ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 98385XAM8 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and 98385XAM8

The main advantage of trading using opposite Lipocine and 98385XAM8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipocine position performs unexpectedly, 98385XAM8 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 98385XAM8 will offset losses from the drop in 98385XAM8's long position.

The idea behind Lipocine and XTO ENERGY INC 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 Stocks Directory module to find actively traded stocks across global markets.