Correlation Between Royalty Management and Lipocine

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

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

Diversification Opportunities for Royalty Management and Lipocine

0.06

Correlation Coefficient

Royalty Management  Lipocine

Significant diversification

The 3 months correlation between Royalty and Lipocine is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Royalty Management 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 Royalty Management Holding 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 Royalty Management i.e., Royalty Management and Lipocine go up and down completely randomly.

Pair Corralation between Royalty Management and Lipocine

Given the investment horizon of 90 days Royalty Management Holding is expected to under-perform the Lipocine. In addition to that, Royalty Management is 1.21 times more volatile than Lipocine. It trades about -0.08 of its total potential returns per unit of risk. Lipocine is currently generating about -0.08 per unit of volatility. If you would invest  468.00  in Lipocine on October 20, 2024 and sell it today you would lose (31.00) from holding Lipocine or give up 6.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Royalty Management Holding  vs.  Lipocine

Royalty Management

Risk-Adjusted Performance

4 of 100

Insignificant

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

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 weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Royalty Management and Lipocine

The main advantage of trading using opposite Royalty Management and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalty Management 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 Royalty Management Holding 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.

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.