Correlation Between Coca Cola and Lipocine
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Lipocine, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Lipocine.
Diversification Opportunities for Coca Cola and Lipocine
Good diversification
The 3 months correlation between Coca and Lipocine is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Coca Cola 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and Lipocine go up and down completely randomly.
Pair Corralation between Coca Cola and Lipocine
Allowing for the 90-day total investment horizon Coca Cola is expected to generate 5.09 times less return on investment than Lipocine. But when comparing it to its historical volatility, The Coca Cola is 6.55 times less risky than Lipocine. It trades about 0.05 of its potential returns per unit of risk. Lipocine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 393.00 in Lipocine on November 3, 2024 and sell it today you would earn a total of 39.00 from holding Lipocine or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Lipocine
Performance |
| Timeline |
| Coca Cola |
| Lipocine |
Coca Cola and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Lipocine
The main advantage of trading using opposite Coca Cola and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| Lipocine vs. Reviva Pharmaceuticals Holdings | Lipocine vs. ZyVersa Therapeutics | Lipocine vs. Unicycive Therapeutics | Lipocine vs. Checkpoint 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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