Correlation Between Ryanair Holdings and Lipocine

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

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

Diversification Opportunities for Ryanair Holdings and Lipocine

0.33

Correlation Coefficient

Ryanair Holdings  Lipocine

Weak diversification

The 3 months correlation between Ryanair and Lipocine is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Ryanair Holdings 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 Ryanair Holdings PLC 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 Ryanair Holdings i.e., Ryanair Holdings and Lipocine go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Lipocine

Assuming the 90 days horizon Ryanair Holdings is expected to generate 4.32 times less return on investment than Lipocine. But when comparing it to its historical volatility, Ryanair Holdings PLC is 2.64 times less risky than Lipocine. It trades about 0.04 of its potential returns per unit of risk. Lipocine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Lipocine on October 1, 2024 and sell it today you would earn a total of  216.00  from holding Lipocine or generate 83.08% return on investment over 90 days.

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

Ryanair Holdings PLC  vs.  Lipocine

Ryanair Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryanair Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ryanair Holdings 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

4 of 100

Insignificant

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

Pair Trading with Ryanair Holdings and Lipocine

The main advantage of trading using opposite Ryanair Holdings and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings 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 Ryanair Holdings PLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.