Correlation Between Abcellera Biologics and Stepan

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

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

Diversification Opportunities for Abcellera Biologics and Stepan

0.0

Correlation Coefficient

Abcellera Biologics  Stepan

Pay attention - limited upside

The 3 months correlation between Abcellera and Stepan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abcellera Biologics and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Abcellera Biologics 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 Abcellera Biologics are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Abcellera Biologics i.e., Abcellera Biologics and Stepan go up and down completely randomly.

Pair Corralation between Abcellera Biologics and Stepan

Given the investment horizon of 90 days Abcellera Biologics is expected to under-perform the Stepan. In addition to that, Abcellera Biologics is 1.97 times more volatile than Stepan Company. It trades about -0.05 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.07 per unit of volatility. If you would invest  8,442  in Stepan Company on September 24, 2024 and sell it today you would lose (1,730) from holding Stepan Company or give up 20.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Abcellera Biologics  vs.  Stepan Company

Abcellera Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abcellera Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Abcellera Biologics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Stepan Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stepan Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Abcellera Biologics and Stepan

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

The idea behind Abcellera Biologics and Stepan Company 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.