Correlation Between Acumen Pharmaceuticals and Lipocine

Can any of the company-specific risk be diversified away by investing in both Acumen Pharmaceuticals 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 Acumen Pharmaceuticals and Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acumen Pharmaceuticals and Lipocine, you can compare the effects of market volatilities on Acumen Pharmaceuticals 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 Acumen Pharmaceuticals with a short position of Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acumen Pharmaceuticals and Lipocine.

Diversification Opportunities for Acumen Pharmaceuticals and Lipocine

0.52

Correlation Coefficient

Acumen Pharmaceuticals  Lipocine

Very weak diversification

The 3 months correlation between Acumen and Lipocine is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Acumen Pharmaceuticals 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 Acumen Pharmaceuticals 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 Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Lipocine go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and Lipocine

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to generate 4.63 times less return on investment than Lipocine. But when comparing it to its historical volatility, Acumen Pharmaceuticals is 1.05 times less risky than Lipocine. It trades about 0.02 of its potential returns per unit of risk. Lipocine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  372.00  in Lipocine on September 4, 2024 and sell it today you would earn a total of  58.00  from holding Lipocine or generate 15.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Acumen Pharmaceuticals  vs.  Lipocine

Acumen Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Acumen Pharmaceuticals is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Lipocine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acumen Pharmaceuticals and Lipocine

The main advantage of trading using opposite Acumen Pharmaceuticals and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acumen Pharmaceuticals 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 Acumen Pharmaceuticals 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.

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.