Correlation Between Lipocine and MOLSON

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

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

Diversification Opportunities for Lipocine and MOLSON

-0.61

Correlation Coefficient

Lipocine  MOLSON

Excellent diversification

The 3 months correlation between Lipocine and MOLSON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and MOLSON RS BREWING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BREWING 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 MOLSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BREWING has no effect on the direction of Lipocine i.e., Lipocine and MOLSON go up and down completely randomly.

Pair Corralation between Lipocine and MOLSON

Given the investment horizon of 90 days Lipocine is expected to generate 4.59 times more return on investment than MOLSON. However, Lipocine is 4.59 times more volatile than MOLSON RS BREWING. It trades about 0.07 of its potential returns per unit of risk. MOLSON RS BREWING is currently generating about -0.08 per unit of risk. If you would invest  461.00  in Lipocine on September 13, 2024 and sell it today you would earn a total of  70.00  from holding Lipocine or generate 15.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Lipocine  vs.  MOLSON RS BREWING

Lipocine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 5 (%) 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.

MOLSON RS BREWING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOLSON RS BREWING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MOLSON is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lipocine and MOLSON

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

The idea behind Lipocine and MOLSON RS BREWING 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.