Correlation Between Lipocine and Zeo Energy

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

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

Diversification Opportunities for Lipocine and Zeo Energy

-0.21

Correlation Coefficient

Lipocine  Zeo Energy

Very good diversification

The 3 months correlation between Lipocine and Zeo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Zeo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeo Energy Corp 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 Zeo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeo Energy Corp has no effect on the direction of Lipocine i.e., Lipocine and Zeo Energy go up and down completely randomly.

Pair Corralation between Lipocine and Zeo Energy

Given the investment horizon of 90 days Lipocine is expected to generate 63.94 times less return on investment than Zeo Energy. But when comparing it to its historical volatility, Lipocine is 3.38 times less risky than Zeo Energy. It trades about 0.01 of its potential returns per unit of risk. Zeo Energy Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8.72  in Zeo Energy Corp on October 27, 2024 and sell it today you would earn a total of  3.28  from holding Zeo Energy Corp or generate 37.61% return on investment over 90 days.

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

Lipocine  vs.  Zeo Energy Corp

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 latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Zeo Energy Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zeo Energy Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Zeo Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lipocine and Zeo Energy

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

The idea behind Lipocine and Zeo Energy Corp 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.