Correlation Between Stepan and 197677AH0

Can any of the company-specific risk be diversified away by investing in both Stepan and 197677AH0 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 197677AH0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stepan Company and HCA 75 percent, you can compare the effects of market volatilities on Stepan and 197677AH0 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 197677AH0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and 197677AH0.

Diversification Opportunities for Stepan and 197677AH0

-0.03

Correlation Coefficient

Stepan  197677AH0

Good diversification

The 3 months correlation between Stepan and 197677AH0 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and HCA 75 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA 75 percent 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 197677AH0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA 75 percent has no effect on the direction of Stepan i.e., Stepan and 197677AH0 go up and down completely randomly.

Pair Corralation between Stepan and 197677AH0

Considering the 90-day investment horizon Stepan Company is expected to generate 0.73 times more return on investment than 197677AH0. However, Stepan Company is 1.37 times less risky than 197677AH0. It trades about 0.05 of its potential returns per unit of risk. HCA 75 percent is currently generating about -0.02 per unit of risk. If you would invest  7,206  in Stepan Company on September 12, 2024 and sell it today you would earn a total of  328.00  from holding Stepan Company or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Stepan Company  vs.  HCA 75 percent

Stepan Company

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stepan Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Stepan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

HCA 75 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HCA 75 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 197677AH0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stepan and 197677AH0

The main advantage of trading using opposite Stepan and 197677AH0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, 197677AH0 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 197677AH0 will offset losses from the drop in 197677AH0's long position.

The idea behind Stepan Company and HCA 75 percent 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.