Correlation Between Lipocine and Artisan Partners

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

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

Diversification Opportunities for Lipocine and Artisan Partners

0.02

Correlation Coefficient

Lipocine  Artisan Partners

Significant diversification

The 3 months correlation between Lipocine and Artisan is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset and Lipocine 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 Lipocine are associated (or correlated) with Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Lipocine i.e., Lipocine and Artisan Partners go up and down completely randomly.

Pair Corralation between Lipocine and Artisan Partners

Given the investment horizon of 90 days Lipocine is expected to generate 2.52 times more return on investment than Artisan Partners. However, Lipocine is 2.52 times more volatile than Artisan Partners Asset. It trades about 0.05 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about 0.08 per unit of risk. If you would invest  477.00  in Lipocine on September 19, 2024 and sell it today you would earn a total of  44.00  from holding Lipocine or generate 9.22% return on investment over 90 days.

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

Lipocine  vs.  Artisan Partners Asset

Lipocine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 4 (%) 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.

Artisan Partners Asset

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Artisan Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lipocine and Artisan Partners

The main advantage of trading using opposite Lipocine and Artisan Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipocine position performs unexpectedly, Artisan Partners 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 Artisan Partners will offset losses from the drop in Artisan Partners' long position.

The idea behind Lipocine and Artisan Partners Asset 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.