Correlation Between Lipocine and GEN Restaurant

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

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

Diversification Opportunities for Lipocine and GEN Restaurant

0.39

Correlation Coefficient

Lipocine  GEN Restaurant

Weak diversification

The 3 months correlation between Lipocine and GEN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Lipocine i.e., Lipocine and GEN Restaurant go up and down completely randomly.

Pair Corralation between Lipocine and GEN Restaurant

Given the investment horizon of 90 days Lipocine is expected to generate 1.24 times more return on investment than GEN Restaurant. However, Lipocine is 1.24 times more volatile than GEN Restaurant Group,. It trades about 0.04 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about 0.0 per unit of risk. If you would invest  454.00  in Lipocine on September 21, 2024 and sell it today you would earn a total of  30.00  from holding Lipocine or generate 6.61% return on investment over 90 days.

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

Lipocine  vs.  GEN Restaurant Group,

Lipocine

Risk-Adjusted Performance

3 of 100

Weak

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

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lipocine and GEN Restaurant

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

The idea behind Lipocine and GEN Restaurant Group, 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.