Correlation Between Calumet Specialty and Lipocine

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

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

Diversification Opportunities for Calumet Specialty and Lipocine

-0.37

Correlation Coefficient

Calumet Specialty  Lipocine

Very good diversification

The 3 months correlation between Calumet and Lipocine is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Calumet Specialty 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 Calumet Specialty Products 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 Calumet Specialty i.e., Calumet Specialty and Lipocine go up and down completely randomly.

Pair Corralation between Calumet Specialty and Lipocine

Given the investment horizon of 90 days Calumet Specialty Products is expected to generate 0.66 times more return on investment than Lipocine. However, Calumet Specialty Products is 1.52 times less risky than Lipocine. It trades about 0.02 of its potential returns per unit of risk. Lipocine is currently generating about -0.02 per unit of risk. If you would invest  1,432  in Calumet Specialty Products on January 26, 2024 and sell it today you would earn a total of  188.00  from holding Calumet Specialty Products or generate 13.13% return on investment over 90 days.

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

Calumet Specialty Products  vs.  Lipocine

Calumet Specialty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calumet Specialty Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Calumet Specialty is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 inconsistent fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calumet Specialty and Lipocine

The main advantage of trading using opposite Calumet Specialty and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calumet Specialty 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 Calumet Specialty Products 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.