Correlation Between MW Investment and Lipella Pharmaceuticals

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

By analyzing existing cross correlation between MW Investment Holding and Lipella Pharmaceuticals Common, you can compare the effects of market volatilities on MW Investment and Lipella Pharmaceuticals 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 MW Investment with a short position of Lipella Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MW Investment and Lipella Pharmaceuticals.

Diversification Opportunities for MW Investment and Lipella Pharmaceuticals

0.0

Correlation Coefficient

MW Investment  Lipella Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between MEGH and Lipella is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MW Investment Holding and Lipella Pharmaceuticals Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipella Pharmaceuticals and MW Investment 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 MW Investment Holding are associated (or correlated) with Lipella Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipella Pharmaceuticals has no effect on the direction of MW Investment i.e., MW Investment and Lipella Pharmaceuticals go up and down completely randomly.

Pair Corralation between MW Investment and Lipella Pharmaceuticals

Given the investment horizon of 90 days MW Investment Holding is expected to generate 5.27 times more return on investment than Lipella Pharmaceuticals. However, MW Investment is 5.27 times more volatile than Lipella Pharmaceuticals Common. It trades about 0.03 of its potential returns per unit of risk. Lipella Pharmaceuticals Common is currently generating about -0.01 per unit of risk. If you would invest  0.26  in MW Investment Holding on October 9, 2024 and sell it today you would lose (0.24) from holding MW Investment Holding or give up 92.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

MW Investment Holding  vs.  Lipella Pharmaceuticals Common

MW Investment Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MW Investment Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, MW Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Lipella Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipella Pharmaceuticals Common are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lipella Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MW Investment and Lipella Pharmaceuticals

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

The idea behind MW Investment Holding and Lipella Pharmaceuticals Common 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.