Correlation Between 26443CAA1 and Lipocine

Can any of the company-specific risk be diversified away by investing in both 26443CAA1 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 26443CAA1 and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE UNIV HEALTH and Lipocine, you can compare the effects of market volatilities on 26443CAA1 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 26443CAA1 with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26443CAA1 and Lipocine.

Diversification Opportunities for 26443CAA1 and Lipocine

0.5

Correlation Coefficient

26443CAA1  Lipocine

Very weak diversification

The 3 months correlation between 26443CAA1 and Lipocine is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DUKE UNIV HEALTH and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and 26443CAA1 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 DUKE UNIV HEALTH 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 26443CAA1 i.e., 26443CAA1 and Lipocine go up and down completely randomly.

Pair Corralation between 26443CAA1 and Lipocine

Assuming the 90 days trading horizon DUKE UNIV HEALTH is expected to under-perform the Lipocine. But the bond apears to be less risky and, when comparing its historical volatility, DUKE UNIV HEALTH is 2.31 times less risky than Lipocine. The bond trades about -0.23 of its potential returns per unit of risk. The Lipocine is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Lipocine on October 8, 2024 and sell it today you would lose (15.00) from holding Lipocine or give up 2.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.84%
Values	Daily Returns

DUKE UNIV HEALTH  vs.  Lipocine

DUKE UNIV HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE UNIV HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26443CAA1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 very healthy fundamental indicators, Lipocine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 26443CAA1 and Lipocine

The main advantage of trading using opposite 26443CAA1 and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26443CAA1 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 DUKE UNIV HEALTH 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.