Correlation Between Alpha Tau and Lipocine

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

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

Diversification Opportunities for Alpha Tau and Lipocine

-0.33

Correlation Coefficient

Alpha Tau  Lipocine

Very good diversification

The 3 months correlation between Alpha and Lipocine is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Alpha Tau 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 Alpha Tau Medical 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 Alpha Tau i.e., Alpha Tau and Lipocine go up and down completely randomly.

Pair Corralation between Alpha Tau and Lipocine

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 0.72 times more return on investment than Lipocine. However, Alpha Tau Medical is 1.38 times less risky than Lipocine. It trades about 0.02 of its potential returns per unit of risk. Lipocine is currently generating about 0.01 per unit of risk. If you would invest  326.00  in Alpha Tau Medical on September 29, 2024 and sell it today you would lose (17.00) from holding Alpha Tau Medical or give up 5.21% of portfolio value over 90 days.

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

Alpha Tau Medical  vs.  Lipocine

Alpha Tau Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alpha Tau unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Tau and Lipocine

The main advantage of trading using opposite Alpha Tau and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Tau 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 Alpha Tau Medical 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.