Correlation Between Lipocine and Mattel

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

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

Diversification Opportunities for Lipocine and Mattel

0.37

Correlation Coefficient

Lipocine  Mattel

Weak diversification

The 3 months correlation between Lipocine and Mattel is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc 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 Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of Lipocine i.e., Lipocine and Mattel go up and down completely randomly.

Pair Corralation between Lipocine and Mattel

Given the investment horizon of 90 days Lipocine is expected to generate 2.46 times more return on investment than Mattel. However, Lipocine is 2.46 times more volatile than Mattel Inc. It trades about 0.04 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.04 per unit of risk. If you would invest  449.00  in Lipocine on September 29, 2024 and sell it today you would earn a total of  27.00  from holding Lipocine or generate 6.01% 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.  Mattel Inc

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.

Mattel Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mattel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mattel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lipocine and Mattel

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

The idea behind Lipocine and Mattel Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.