Correlation Between Lipocine and AllovirInc

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

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

Diversification Opportunities for Lipocine and AllovirInc

0.57

Correlation Coefficient

Lipocine  AllovirInc

Very weak diversification

The 3 months correlation between Lipocine and AllovirInc is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and AllovirInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllovirInc and Lipocine 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 Lipocine are associated (or correlated) with AllovirInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllovirInc has no effect on the direction of Lipocine i.e., Lipocine and AllovirInc go up and down completely randomly.

Pair Corralation between Lipocine and AllovirInc

Given the investment horizon of 90 days Lipocine is expected to under-perform the AllovirInc. But the stock apears to be less risky and, when comparing its historical volatility, Lipocine is 1.36 times less risky than AllovirInc. The stock trades about -0.02 of its potential returns per unit of risk. The AllovirInc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  497.00  in AllovirInc on January 26, 2024 and sell it today you would lose (419.00) from holding AllovirInc or give up 84.31% of portfolio value over 90 days.

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

Lipocine  vs.  AllovirInc

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

AllovirInc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AllovirInc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AllovirInc may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Lipocine and AllovirInc

The main advantage of trading using opposite Lipocine and AllovirInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipocine position performs unexpectedly, AllovirInc 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 AllovirInc will offset losses from the drop in AllovirInc's long position.

The idea behind Lipocine and AllovirInc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.