Correlation Between Spyre Therapeutics and Lipocine

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

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

Diversification Opportunities for Spyre Therapeutics and Lipocine

0.6

Correlation Coefficient

Spyre Therapeutics  Lipocine

Poor diversification

The 3 months correlation between Spyre and Lipocine is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Spyre Therapeutics and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Spyre Therapeutics 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 Spyre Therapeutics 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 Spyre Therapeutics i.e., Spyre Therapeutics and Lipocine go up and down completely randomly.

Pair Corralation between Spyre Therapeutics and Lipocine

Given the investment horizon of 90 days Spyre Therapeutics is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Spyre Therapeutics is 1.17 times less risky than Lipocine. The stock trades about -0.4 of its potential returns per unit of risk. The Lipocine is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  510.00  in Lipocine on September 13, 2024 and sell it today you would earn a total of  21.00  from holding Lipocine or generate 4.12% return on investment over 90 days.

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

Spyre Therapeutics  vs.  Lipocine

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Spyre Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lipocine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spyre Therapeutics and Lipocine

The main advantage of trading using opposite Spyre Therapeutics and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spyre Therapeutics 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 Spyre Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.