Correlation Between MOLSON and Lipocine

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

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

Diversification Opportunities for MOLSON and Lipocine

-0.6

Correlation Coefficient

MOLSON  Lipocine

Excellent diversification

The 3 months correlation between MOLSON and Lipocine is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BREWING and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and MOLSON 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 MOLSON RS BREWING 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 MOLSON i.e., MOLSON and Lipocine go up and down completely randomly.

Pair Corralation between MOLSON and Lipocine

Assuming the 90 days trading horizon MOLSON RS BREWING is expected to under-perform the Lipocine. But the bond apears to be less risky and, when comparing its historical volatility, MOLSON RS BREWING is 4.58 times less risky than Lipocine. The bond trades about -0.1 of its potential returns per unit of risk. The Lipocine is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Lipocine on September 14, 2024 and sell it today you would earn a total of  51.00  from holding Lipocine or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

MOLSON RS BREWING  vs.  Lipocine

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 latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MOLSON RS BREWING investors.

Lipocine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 4 (%) 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 MOLSON and Lipocine

The main advantage of trading using opposite MOLSON and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON 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 MOLSON RS BREWING 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.