Correlation Between Lipocine and Sun Life

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

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

Diversification Opportunities for Lipocine and Sun Life

-0.24

Correlation Coefficient

Lipocine  Sun Life

Very good diversification

The 3 months correlation between Lipocine and Sun is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Lipocine i.e., Lipocine and Sun Life go up and down completely randomly.

Pair Corralation between Lipocine and Sun Life

Given the investment horizon of 90 days Lipocine is expected to under-perform the Sun Life. In addition to that, Lipocine is 6.09 times more volatile than Sun Life Financial. It trades about -0.02 of its total potential returns per unit of risk. Sun Life Financial is currently generating about -0.03 per unit of volatility. If you would invest  6,047  in Sun Life Financial on September 15, 2024 and sell it today you would lose (34.00) from holding Sun Life Financial or give up 0.56% of portfolio value over 90 days.

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

Lipocine  vs.  Sun Life Financial

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 uncertain fundamental indicators, Lipocine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sun Life Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lipocine and Sun Life

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

The idea behind Lipocine and Sun Life Financial 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.