Correlation Between Portmeirion Group and Lipocine

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

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

Diversification Opportunities for Portmeirion Group and Lipocine

-0.22

Correlation Coefficient

Portmeirion Group  Lipocine

Very good diversification

The 3 months correlation between Portmeirion and Lipocine is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Portmeirion Group PLC and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Portmeirion Group 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 Portmeirion Group PLC 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 Portmeirion Group i.e., Portmeirion Group and Lipocine go up and down completely randomly.

Pair Corralation between Portmeirion Group and Lipocine

Assuming the 90 days horizon Portmeirion Group is expected to generate 9.33 times less return on investment than Lipocine. But when comparing it to its historical volatility, Portmeirion Group PLC is 46.45 times less risky than Lipocine. It trades about 0.17 of its potential returns per unit of risk. Lipocine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  483.00  in Lipocine on September 17, 2024 and sell it today you would earn a total of  16.00  from holding Lipocine or generate 3.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Portmeirion Group PLC  vs.  Lipocine

Portmeirion Group PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portmeirion Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Portmeirion Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lipocine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 2 (%) 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.

Pair Trading with Portmeirion Group and Lipocine

The main advantage of trading using opposite Portmeirion Group and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portmeirion Group 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 Portmeirion Group PLC 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.