Correlation Between 191216DP2 and Lipocine

Can any of the company-specific risk be diversified away by investing in both 191216DP2 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 191216DP2 and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Lipocine, you can compare the effects of market volatilities on 191216DP2 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 191216DP2 with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216DP2 and Lipocine.

Diversification Opportunities for 191216DP2 and Lipocine

-0.38

Correlation Coefficient

191216DP2  Lipocine

Very good diversification

The 3 months correlation between 191216DP2 and Lipocine is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and 191216DP2 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 COCA COLA CO 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 191216DP2 i.e., 191216DP2 and Lipocine go up and down completely randomly.

Pair Corralation between 191216DP2 and Lipocine

Assuming the 90 days trading horizon COCA COLA CO is expected to under-perform the Lipocine. But the bond apears to be less risky and, when comparing its historical volatility, COCA COLA CO is 12.03 times less risky than Lipocine. The bond trades about -0.17 of its potential returns per unit of risk. The Lipocine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  464.00  in Lipocine on September 26, 2024 and sell it today you would earn a total of  26.00  from holding Lipocine or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

COCA COLA CO  vs.  Lipocine

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216DP2 is not utilizing all of its potentials. The recent stock price disturbance, 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 unsteady fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 191216DP2 and Lipocine

The main advantage of trading using opposite 191216DP2 and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216DP2 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 COCA COLA CO 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.