Correlation Between Bright Minds and Lipocine
Can any of the company-specific risk be diversified away by investing in both Bright Minds 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 Bright Minds and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Minds Biosciences and Lipocine, you can compare the effects of market volatilities on Bright Minds 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 Bright Minds with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Minds and Lipocine.
Diversification Opportunities for Bright Minds and Lipocine
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bright and Lipocine is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bright Minds Biosciences and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Bright Minds 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 Bright Minds Biosciences 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 Bright Minds i.e., Bright Minds and Lipocine go up and down completely randomly.
Pair Corralation between Bright Minds and Lipocine
Given the investment horizon of 90 days Bright Minds Biosciences is expected to generate 1.06 times more return on investment than Lipocine. However, Bright Minds is 1.06 times more volatile than Lipocine. It trades about -0.06 of its potential returns per unit of risk. Lipocine is currently generating about -0.13 per unit of risk. If you would invest 4,502 in Bright Minds Biosciences on August 30, 2024 and sell it today you would lose (584.00) from holding Bright Minds Biosciences or give up 12.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Minds Biosciences vs. Lipocine
Performance |
| Timeline |
| Bright Minds Biosciences |
| Lipocine |
Bright Minds and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Minds and Lipocine
The main advantage of trading using opposite Bright Minds and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Minds 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.| Bright Minds vs. Revelation Biosciences | Bright Minds vs. Zura Bio Limited | Bright Minds vs. Phio Pharmaceuticals Corp | Bright Minds vs. ZyVersa Therapeutics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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