Correlation Between Level and Lipocine

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

By analyzing existing cross correlation between Level 3 Financing and Lipocine, you can compare the effects of market volatilities on Level 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 Level with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Level and Lipocine.

Diversification Opportunities for Level and Lipocine

0.0

Correlation Coefficient

Level  Lipocine

Pay attention - limited upside

The 3 months correlation between Level and Lipocine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Level 3 Financing and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Level 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 Level 3 Financing 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 Level i.e., Level and Lipocine go up and down completely randomly.

Pair Corralation between Level and Lipocine

Assuming the 90 days trading horizon Level 3 Financing is expected to generate 7.33 times more return on investment than Lipocine. However, Level is 7.33 times more volatile than Lipocine. It trades about 0.01 of its potential returns per unit of risk. Lipocine is currently generating about 0.05 per unit of risk. If you would invest  9,400  in Level 3 Financing on October 10, 2024 and sell it today you would lose (904.00) from holding Level 3 Financing or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

Level 3 Financing  vs.  Lipocine

Level 3 Financing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Level 3 Financing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Level sustained solid returns over the last few months and may actually be approaching a breakup point.

Lipocine

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) 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 Level and Lipocine

The main advantage of trading using opposite Level and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Level 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 Level 3 Financing 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.