Correlation Between Moleculin Biotech and Lipocine

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

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

Diversification Opportunities for Moleculin Biotech and Lipocine

0.31

Correlation Coefficient

Moleculin Biotech  Lipocine

Weak diversification

The 3 months correlation between Moleculin and Lipocine is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Moleculin Biotech and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Moleculin Biotech 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 Moleculin Biotech 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 Moleculin Biotech i.e., Moleculin Biotech and Lipocine go up and down completely randomly.

Pair Corralation between Moleculin Biotech and Lipocine

Given the investment horizon of 90 days Moleculin Biotech is expected to generate 1.49 times more return on investment than Lipocine. However, Moleculin Biotech is 1.49 times more volatile than Lipocine. It trades about 0.11 of its potential returns per unit of risk. Lipocine is currently generating about -0.08 per unit of risk. If you would invest  173.00  in Moleculin Biotech on October 23, 2024 and sell it today you would earn a total of  15.00  from holding Moleculin Biotech or generate 8.67% return on investment over 90 days.

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

Moleculin Biotech  vs.  Lipocine

Moleculin Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moleculin Biotech 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 basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Moleculin Biotech and Lipocine

The main advantage of trading using opposite Moleculin Biotech and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moleculin Biotech 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 Moleculin Biotech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.