Correlation Between Lipocine and Bright Minds
Can any of the company-specific risk be diversified away by investing in both Lipocine and Bright Minds 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 Bright Minds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipocine and Bright Minds Biosciences, you can compare the effects of market volatilities on Lipocine and Bright Minds 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 Bright Minds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and Bright Minds.
Diversification Opportunities for Lipocine and Bright Minds
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lipocine and Bright is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Bright Minds Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Minds Biosciences 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 Bright Minds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Minds Biosciences has no effect on the direction of Lipocine i.e., Lipocine and Bright Minds go up and down completely randomly.
Pair Corralation between Lipocine and Bright Minds
Given the investment horizon of 90 days Lipocine is expected to generate 36.04 times less return on investment than Bright Minds. But when comparing it to its historical volatility, Lipocine is 8.42 times less risky than Bright Minds. It trades about 0.01 of its potential returns per unit of risk. Bright Minds Biosciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Bright Minds Biosciences on August 30, 2024 and sell it today you would earn a total of 3,398 from holding Bright Minds Biosciences or generate 653.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipocine vs. Bright Minds Biosciences
Performance |
| Timeline |
| Lipocine |
| Bright Minds Biosciences |
Lipocine and Bright Minds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipocine and Bright Minds
The main advantage of trading using opposite Lipocine and Bright Minds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipocine position performs unexpectedly, Bright Minds 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 Bright Minds will offset losses from the drop in Bright Minds' long position.The idea behind Lipocine and Bright Minds Biosciences 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.| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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