Correlation Between Tyson Foods and Lipocine

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

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

Diversification Opportunities for Tyson Foods and Lipocine

-0.3

Correlation Coefficient

Tyson Foods  Lipocine

Very good diversification

The 3 months correlation between Tyson and Lipocine is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Tyson Foods 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 Tyson Foods 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 Tyson Foods i.e., Tyson Foods and Lipocine go up and down completely randomly.

Pair Corralation between Tyson Foods and Lipocine

Considering the 90-day investment horizon Tyson Foods is expected to generate 10.25 times less return on investment than Lipocine. But when comparing it to its historical volatility, Tyson Foods is 3.5 times less risky than Lipocine. It trades about 0.0 of its potential returns per unit of risk. Lipocine is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Lipocine on October 4, 2024 and sell it today you would lose (458.00) from holding Lipocine or give up 48.41% of portfolio value over 90 days.

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

Tyson Foods  vs.  Lipocine

Tyson Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tyson Foods and Lipocine

The main advantage of trading using opposite Tyson Foods and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods 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 Tyson Foods 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.