Correlation Between PACCAR and Lipocine
Can any of the company-specific risk be diversified away by investing in both PACCAR 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 PACCAR and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and Lipocine, you can compare the effects of market volatilities on PACCAR 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 PACCAR with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and Lipocine.
Diversification Opportunities for PACCAR and Lipocine
Weak diversification
The 3 months correlation between PACCAR and Lipocine is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and PACCAR 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 PACCAR Inc 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 PACCAR i.e., PACCAR and Lipocine go up and down completely randomly.
Pair Corralation between PACCAR and Lipocine
Given the investment horizon of 90 days PACCAR is expected to generate 1.94 times less return on investment than Lipocine. But when comparing it to its historical volatility, PACCAR Inc is 3.48 times less risky than Lipocine. It trades about 0.07 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 429.00 in Lipocine on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Lipocine or generate 20.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. Lipocine
Performance |
| Timeline |
| PACCAR Inc |
| Lipocine |
PACCAR and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and Lipocine
The main advantage of trading using opposite PACCAR and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR 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.The idea behind PACCAR Inc and Lipocine 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.| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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