Correlation Between Stepan and Freedom Internet

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

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

Diversification Opportunities for Stepan and Freedom Internet

0.0

Correlation Coefficient

Stepan  Freedom Internet

Pay attention - limited upside

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

Pair Corralation between Stepan and Freedom Internet

If you would invest  205.00  in Freedom Internet Group on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Freedom Internet Group or generate 0.0% return on investment over 90 days.

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

Stepan Company  vs.  Freedom Internet Group

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 quite persistent fundamental indicators, Stepan is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Freedom Internet

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Stepan and Freedom Internet

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

The idea behind Stepan Company and Freedom Internet Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.