Correlation Between Lipocine and Atea PharmaceuticalsI

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

By analyzing existing cross correlation between Lipocine and Atea PharmaceuticalsInc, you can compare the effects of market volatilities on Lipocine and Atea PharmaceuticalsI 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 Atea PharmaceuticalsI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and Atea PharmaceuticalsI.

Diversification Opportunities for Lipocine and Atea PharmaceuticalsI

-0.66

Correlation Coefficient

Lipocine  Atea PharmaceuticalsI

Excellent diversification

The 3 months correlation between Lipocine and Atea is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Atea PharmaceuticalsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea PharmaceuticalsInc 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 Atea PharmaceuticalsI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea PharmaceuticalsInc has no effect on the direction of Lipocine i.e., Lipocine and Atea PharmaceuticalsI go up and down completely randomly.

Pair Corralation between Lipocine and Atea PharmaceuticalsI

Given the investment horizon of 90 days Lipocine is expected to generate 2.26 times more return on investment than Atea PharmaceuticalsI. However, Lipocine is 2.26 times more volatile than Atea PharmaceuticalsInc. It trades about 0.18 of its potential returns per unit of risk. Atea PharmaceuticalsInc is currently generating about -0.1 per unit of risk. If you would invest  388.00  in Lipocine on February 28, 2024 and sell it today you would earn a total of  299.00  from holding Lipocine or generate 77.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lipocine  vs.  Atea PharmaceuticalsInc

Lipocine

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Atea PharmaceuticalsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atea PharmaceuticalsInc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lipocine and Atea PharmaceuticalsI

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

The idea behind Lipocine and Atea PharmaceuticalsInc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..