Correlation Between Stepan and AdTheorent Holding

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

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

Diversification Opportunities for Stepan and AdTheorent Holding

0.0

Correlation Coefficient

Stepan  AdTheorent Holding

Pay attention - limited upside

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

Pair Corralation between Stepan and AdTheorent Holding

If you would invest (100.00) in AdTheorent Holding on December 22, 2024 and sell it today you would earn a total of  100.00  from holding AdTheorent Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Stepan Company  vs.  AdTheorent Holding

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 weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AdTheorent Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdTheorent Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AdTheorent Holding is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Stepan and AdTheorent Holding

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

The idea behind Stepan Company and AdTheorent Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.