Correlation Between Iron Road and Lipocine

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

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

Diversification Opportunities for Iron Road and Lipocine

0.0

Correlation Coefficient

Iron Road  Lipocine

Pay attention - limited upside

The 3 months correlation between Iron and Lipocine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road Limited and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Iron Road 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 Iron Road Limited 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 Iron Road i.e., Iron Road and Lipocine go up and down completely randomly.

Pair Corralation between Iron Road and Lipocine

Assuming the 90 days horizon Iron Road Limited is expected to under-perform the Lipocine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Iron Road Limited is 3.1 times less risky than Lipocine. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Lipocine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  416.00  in Lipocine on September 12, 2024 and sell it today you would earn a total of  104.00  from holding Lipocine or generate 25.0% return on investment over 90 days.

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

Iron Road Limited  vs.  Lipocine

Iron Road Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Road Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Iron Road is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lipocine

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 8 (%) 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 Iron Road and Lipocine

The main advantage of trading using opposite Iron Road and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road 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 Iron Road Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.