Correlation Between Logan Ridge and Lipocine

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

By analyzing existing cross correlation between Logan Ridge Finance and Lipocine, you can compare the effects of market volatilities on Logan Ridge and Lipocine 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 Logan Ridge with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logan Ridge and Lipocine.

Diversification Opportunities for Logan Ridge and Lipocine

-0.21

Correlation Coefficient

Logan Ridge  Lipocine

Very good diversification

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

Pair Corralation between Logan Ridge and Lipocine

Given the investment horizon of 90 days Logan Ridge is expected to generate 3.02 times less return on investment than Lipocine. But when comparing it to its historical volatility, Logan Ridge Finance is 4.68 times less risky than Lipocine. It trades about 0.06 of its potential returns per unit of risk. Lipocine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  375.00  in Lipocine on October 4, 2024 and sell it today you would earn a total of  111.00  from holding Lipocine or generate 29.6% return on investment over 90 days.

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

Logan Ridge Finance  vs.  Lipocine

Logan Ridge Finance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logan Ridge Finance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Logan Ridge and Lipocine

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

The idea behind Logan Ridge Finance and Lipocine 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.