Correlation Between 75513ECP4 and Stepan

Can any of the company-specific risk be diversified away by investing in both 75513ECP4 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 75513ECP4 and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RTX 303 15 MAR 52 and Stepan Company, you can compare the effects of market volatilities on 75513ECP4 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 75513ECP4 with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of 75513ECP4 and Stepan.

Diversification Opportunities for 75513ECP4 and Stepan

0.11

Correlation Coefficient

75513ECP4  Stepan

Average diversification

The 3 months correlation between 75513ECP4 and Stepan is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding RTX 303 15 MAR 52 and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and 75513ECP4 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 RTX 303 15 MAR 52 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 75513ECP4 i.e., 75513ECP4 and Stepan go up and down completely randomly.

Pair Corralation between 75513ECP4 and Stepan

Assuming the 90 days trading horizon RTX 303 15 MAR 52 is expected to generate 1.6 times more return on investment than Stepan. However, 75513ECP4 is 1.6 times more volatile than Stepan Company. It trades about 0.11 of its potential returns per unit of risk. Stepan Company is currently generating about -0.48 per unit of risk. If you would invest  6,620  in RTX 303 15 MAR 52 on September 28, 2024 and sell it today you would earn a total of  336.00  from holding RTX 303 15 MAR 52 or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

RTX 303 15 MAR 52  vs.  Stepan Company

RTX 303 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTX 303 15 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 75513ECP4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with 75513ECP4 and Stepan

The main advantage of trading using opposite 75513ECP4 and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 75513ECP4 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 RTX 303 15 MAR 52 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.