Correlation Between CytomX Therapeutics and Lipocine

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

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

Diversification Opportunities for CytomX Therapeutics and Lipocine

0.61

Correlation Coefficient

CytomX Therapeutics  Lipocine

Poor diversification

The 3 months correlation between CytomX and Lipocine is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CytomX Therapeutics and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and CytomX 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 CytomX 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 CytomX Therapeutics i.e., CytomX Therapeutics and Lipocine go up and down completely randomly.

Pair Corralation between CytomX Therapeutics and Lipocine

Given the investment horizon of 90 days CytomX Therapeutics is expected to generate 3.42 times less return on investment than Lipocine. But when comparing it to its historical volatility, CytomX Therapeutics is 1.12 times less risky than Lipocine. It trades about 0.08 of its potential returns per unit of risk. Lipocine is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Lipocine on July 3, 2024 and sell it today you would earn a total of  84.00  from holding Lipocine or generate 23.01% return on investment over 90 days.

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

CytomX Therapeutics  vs.  Lipocine

CytomX Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CytomX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, CytomX Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lipocine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lipocine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CytomX Therapeutics and Lipocine

The main advantage of trading using opposite CytomX Therapeutics and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CytomX 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 CytomX 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.