Correlation Between Unicycive Therapeutics and Lipocine

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

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

Diversification Opportunities for Unicycive Therapeutics and Lipocine

0.47

Correlation Coefficient

Unicycive Therapeutics  Lipocine

Very weak diversification

The 3 months correlation between Unicycive and Lipocine is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Unicycive Therapeutics and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and Unicycive Therapeutics 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 Unicycive Therapeutics 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 Unicycive Therapeutics i.e., Unicycive Therapeutics and Lipocine go up and down completely randomly.

Pair Corralation between Unicycive Therapeutics and Lipocine

Given the investment horizon of 90 days Unicycive Therapeutics is expected to generate 1.16 times more return on investment than Lipocine. However, Unicycive Therapeutics is 1.16 times more volatile than Lipocine. It trades about 0.24 of its potential returns per unit of risk. Lipocine is currently generating about 0.1 per unit of risk. If you would invest  32.00  in Unicycive Therapeutics on August 31, 2024 and sell it today you would earn a total of  37.00  from holding Unicycive Therapeutics or generate 115.63% return on investment over 90 days.

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

Unicycive Therapeutics  vs.  Lipocine

Unicycive Therapeutics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Unicycive Therapeutics are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Unicycive Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Lipocine

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unicycive Therapeutics and Lipocine

The main advantage of trading using opposite Unicycive Therapeutics and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unicycive Therapeutics 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 Unicycive Therapeutics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.