Correlation Between Oatly Group and Lipocine

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

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

Diversification Opportunities for Oatly Group and Lipocine

0.48

Correlation Coefficient

Oatly Group  Lipocine

Very weak diversification

The 3 months correlation between Oatly and Lipocine is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Oatly Group 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 Oatly Group AB 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 Oatly Group i.e., Oatly Group and Lipocine go up and down completely randomly.

Pair Corralation between Oatly Group and Lipocine

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the Lipocine. In addition to that, Oatly Group is 1.07 times more volatile than Lipocine. It trades about -0.04 of its total potential returns per unit of risk. Lipocine is currently generating about -0.02 per unit of volatility. If you would invest  515.00  in Lipocine on October 9, 2024 and sell it today you would lose (15.00) from holding Lipocine or give up 2.91% of portfolio value over 90 days.

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

Oatly Group AB  vs.  Lipocine

Oatly Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Oatly Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 very healthy fundamental indicators, Lipocine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oatly Group and Lipocine

The main advantage of trading using opposite Oatly Group and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group 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 Oatly Group AB 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.