Correlation Between Stepan and Paysafe

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

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

Diversification Opportunities for Stepan and Paysafe

0.41

Correlation Coefficient

Stepan  Paysafe

Very weak diversification

The 3 months correlation between Stepan and Paysafe is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Stepan i.e., Stepan and Paysafe go up and down completely randomly.

Pair Corralation between Stepan and Paysafe

Considering the 90-day investment horizon Stepan Company is expected to under-perform the Paysafe. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 2.15 times less risky than Paysafe. The stock trades about -0.04 of its potential returns per unit of risk. The Paysafe is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,442  in Paysafe on September 24, 2024 and sell it today you would earn a total of  286.00  from holding Paysafe or generate 19.83% return on investment over 90 days.

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

Stepan Company  vs.  Paysafe

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.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Stepan and Paysafe

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

The idea behind Stepan Company and Paysafe 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.