Correlation Between Pool and Lipocine
Can any of the company-specific risk be diversified away by investing in both Pool 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 Pool and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and Lipocine, you can compare the effects of market volatilities on Pool 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 Pool with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and Lipocine.
Diversification Opportunities for Pool and Lipocine
Weak diversification
The 3 months correlation between Pool and Lipocine is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Pool 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 Pool Corporation 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 Pool i.e., Pool and Lipocine go up and down completely randomly.
Pair Corralation between Pool and Lipocine
Given the investment horizon of 90 days Pool Corporation is expected to generate 0.27 times more return on investment than Lipocine. However, Pool Corporation is 3.7 times less risky than Lipocine. It trades about -0.13 of its potential returns per unit of risk. Lipocine is currently generating about -0.35 per unit of risk. If you would invest 36,003 in Pool Corporation on November 28, 2024 and sell it today you would lose (1,229) from holding Pool Corporation or give up 3.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pool Corp. vs. Lipocine
Performance |
| Timeline |
| Pool |
| Lipocine |
Pool and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and Lipocine
The main advantage of trading using opposite Pool and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool 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 Pool Corporation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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