Correlation Between Alliance Entertainment and Lipocine

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

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

Diversification Opportunities for Alliance Entertainment and Lipocine

0.31

Correlation Coefficient

Alliance Entertainment  Lipocine

Weak diversification

The 3 months correlation between Alliance and Lipocine is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Entertainment Holding and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Alliance Entertainment 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 Alliance Entertainment Holding 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 Alliance Entertainment i.e., Alliance Entertainment and Lipocine go up and down completely randomly.

Pair Corralation between Alliance Entertainment and Lipocine

Given the investment horizon of 90 days Alliance Entertainment Holding is expected to generate 1.35 times more return on investment than Lipocine. However, Alliance Entertainment is 1.35 times more volatile than Lipocine. It trades about 0.03 of its potential returns per unit of risk. Lipocine is currently generating about 0.02 per unit of risk. If you would invest  1,014  in Alliance Entertainment Holding on September 13, 2024 and sell it today you would lose (361.00) from holding Alliance Entertainment Holding or give up 35.6% of portfolio value over 90 days.

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

Alliance Entertainment Holding  vs.  Lipocine

Alliance Entertainment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Entertainment Holding are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Alliance Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lipocine

Risk-Adjusted Performance

5 of 100

OK

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 uncertain fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Entertainment and Lipocine

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

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..