Correlation Between Femasys and Stepan

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

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

Diversification Opportunities for Femasys and Stepan

-0.56

Correlation Coefficient

Femasys  Stepan

Excellent diversification

The 3 months correlation between Femasys and Stepan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Femasys and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Femasys 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 Femasys 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 Femasys i.e., Femasys and Stepan go up and down completely randomly.

Pair Corralation between Femasys and Stepan

Given the investment horizon of 90 days Femasys is expected to generate 2.39 times more return on investment than Stepan. However, Femasys is 2.39 times more volatile than Stepan Company. It trades about 0.17 of its potential returns per unit of risk. Stepan Company is currently generating about -0.1 per unit of risk. If you would invest  107.00  in Femasys on December 21, 2024 and sell it today you would earn a total of  53.00  from holding Femasys or generate 49.53% return on investment over 90 days.

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

Femasys  vs.  Stepan Company

Femasys

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Femasys are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Femasys showed solid returns over the last few months and may actually be approaching a breakup point.

Stepan Company

Risk-Adjusted Performance

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 weak 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 Femasys and Stepan

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.