Correlation Between High Performance and Stepan

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

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

Diversification Opportunities for High Performance and Stepan

0.0

Correlation Coefficient

High Performance  Stepan

Pay attention - limited upside

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

Pair Corralation between High Performance and Stepan

If you would invest  0.00  in High Performance Beverages on December 21, 2024 and sell it today you would earn a total of  0.00  from holding High Performance Beverages or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

High Performance Beverages  vs.  Stepan Company

High Performance Bev

Risk-Adjusted Performance

Very Weak

Over the last 90 days High Performance Beverages has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, High Performance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stepan Company

Risk-Adjusted Performance

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.

Pair Trading with High Performance and Stepan

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

The idea behind High Performance Beverages and Stepan Company 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.