Correlation Between Lipocine and WuXi AppTec

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

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

Diversification Opportunities for Lipocine and WuXi AppTec

-0.56

Correlation Coefficient

Lipocine  WuXi AppTec

Excellent diversification

The 3 months correlation between Lipocine and WuXi is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Lipocine i.e., Lipocine and WuXi AppTec go up and down completely randomly.

Pair Corralation between Lipocine and WuXi AppTec

Given the investment horizon of 90 days Lipocine is expected to under-perform the WuXi AppTec. In addition to that, Lipocine is 9.75 times more volatile than WuXi AppTec Co. It trades about -0.08 of its total potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.23 per unit of volatility. If you would invest  681.00  in WuXi AppTec Co on October 25, 2024 and sell it today you would lose (12.00) from holding WuXi AppTec Co or give up 1.76% of portfolio value over 90 days.

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

Lipocine  vs.  WuXi AppTec Co

Lipocine

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

WuXi AppTec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, WuXi AppTec reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and WuXi AppTec

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

The idea behind Lipocine and WuXi AppTec Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.