Correlation Between Stephan and Kimberly Clark

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

By analyzing existing cross correlation between The Stephan Co and Kimberly Clark, you can compare the effects of market volatilities on Stephan and Kimberly Clark 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 Stephan with a short position of Kimberly Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stephan and Kimberly Clark.

Diversification Opportunities for Stephan and Kimberly Clark

0.0

Correlation Coefficient

Stephan  Kimberly Clark

Pay attention - limited upside

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

Pair Corralation between Stephan and Kimberly Clark

If you would invest  13,195  in Kimberly Clark on December 26, 2024 and sell it today you would earn a total of  766.00  from holding Kimberly Clark or generate 5.81% return on investment over 90 days.

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

The Stephan Co  vs.  Kimberly Clark

The Stephan

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Stephan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Stephan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Kimberly Clark

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Kimberly Clark is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stephan and Kimberly Clark

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

The idea behind The Stephan Co and Kimberly Clark 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..