Correlation Between Stepan and NexPrise

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

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

Diversification Opportunities for Stepan and NexPrise

0.0

Correlation Coefficient

Stepan  NexPrise

Pay attention - limited upside

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

Pair Corralation between Stepan and NexPrise

If you would invest  0.01  in NexPrise on September 20, 2024 and sell it today you would earn a total of  0.00  from holding NexPrise or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Stepan Company  vs.  NexPrise

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 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.

NexPrise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NexPrise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NexPrise is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stepan and NexPrise

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

The idea behind Stepan Company and NexPrise 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.