Correlation Between Lyra Therapeutics and Lipocine

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

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

Diversification Opportunities for Lyra Therapeutics and Lipocine

0.18

Correlation Coefficient

Lyra Therapeutics  Lipocine

Average diversification

The 3 months correlation between Lyra and Lipocine is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lyra Therapeutics and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Lyra Therapeutics 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 Lyra Therapeutics 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 Lyra Therapeutics i.e., Lyra Therapeutics and Lipocine go up and down completely randomly.

Pair Corralation between Lyra Therapeutics and Lipocine

Given the investment horizon of 90 days Lyra Therapeutics is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Lyra Therapeutics is 1.06 times less risky than Lipocine. The stock trades about -0.17 of its potential returns per unit of risk. The Lipocine is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  458.00  in Lipocine on December 28, 2024 and sell it today you would lose (130.00) from holding Lipocine or give up 28.38% of portfolio value over 90 days.

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

Lyra Therapeutics  vs.  Lipocine

Lyra Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyra Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Lyra Therapeutics and Lipocine

The main advantage of trading using opposite Lyra Therapeutics and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyra Therapeutics 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 Lyra Therapeutics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.