Correlation Between Lipocine and Biocardia

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

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

Diversification Opportunities for Lipocine and Biocardia

-0.1

Correlation Coefficient

Lipocine  Biocardia

Good diversification

The 3 months correlation between Lipocine and Biocardia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia 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 Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Lipocine i.e., Lipocine and Biocardia go up and down completely randomly.

Pair Corralation between Lipocine and Biocardia

Given the investment horizon of 90 days Lipocine is expected to generate 0.99 times more return on investment than Biocardia. However, Lipocine is 1.01 times less risky than Biocardia. It trades about 0.03 of its potential returns per unit of risk. Biocardia is currently generating about -0.06 per unit of risk. If you would invest  474.00  in Lipocine on September 25, 2024 and sell it today you would earn a total of  15.81  from holding Lipocine or generate 3.34% return on investment over 90 days.

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

Lipocine  vs.  Biocardia

Lipocine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lipocine and Biocardia

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

The idea behind Lipocine and Biocardia 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.