Correlation Between Lipocine and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Lipocine and Lithium Americas 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 Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipocine and Lithium Americas Corp, you can compare the effects of market volatilities on Lipocine and Lithium Americas 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 Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and Lithium Americas.
Diversification Opportunities for Lipocine and Lithium Americas
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lipocine and Lithium is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp 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 Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of Lipocine i.e., Lipocine and Lithium Americas go up and down completely randomly.
Pair Corralation between Lipocine and Lithium Americas
Given the investment horizon of 90 days Lipocine is expected to generate 1.37 times more return on investment than Lithium Americas. However, Lipocine is 1.37 times more volatile than Lithium Americas Corp. It trades about 0.06 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about 0.0 per unit of risk. If you would invest 510.00 in Lipocine on September 13, 2024 and sell it today you would earn a total of 21.00 from holding Lipocine or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipocine vs. Lithium Americas Corp
Performance |
| Timeline |
| Lipocine |
| Lithium Americas Corp |
Lipocine and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipocine and Lithium Americas
The main advantage of trading using opposite Lipocine and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipocine position performs unexpectedly, Lithium Americas 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 Lithium Americas will offset losses from the drop in Lithium Americas' long position.| Lipocine vs. Emergent Biosolutions | Lipocine vs. Bausch Health Companies | Lipocine vs. Neurocrine Biosciences | Lipocine vs. Teva Pharma Industries |
| Lithium Americas vs. Anheuser Busch Inbev | Lithium Americas vs. Dave Busters Entertainment | Lithium Americas vs. AMCON Distributing | Lithium Americas vs. Molson Coors Brewing |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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