Correlation Between Mattel and Lipocine

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

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

Diversification Opportunities for Mattel and Lipocine

0.37

Correlation Coefficient

Mattel  Lipocine

Weak diversification

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

Pair Corralation between Mattel and Lipocine

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 2.46 times less risky than Lipocine. The stock trades about -0.04 of its potential returns per unit of risk. The Lipocine is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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

Mattel Inc  vs.  Lipocine

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.

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.

Pair Trading with Mattel and Lipocine

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

The idea behind Mattel Inc and Lipocine 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.