Correlation Between Acme United and Stepan
Can any of the company-specific risk be diversified away by investing in both Acme United 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 Acme United and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Stepan Company, you can compare the effects of market volatilities on Acme United 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 Acme United with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Stepan.
Diversification Opportunities for Acme United and Stepan
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Acme and Stepan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Acme United 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 Acme United 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 Acme United i.e., Acme United and Stepan go up and down completely randomly.
Pair Corralation between Acme United and Stepan
Considering the 90-day investment horizon Acme United is expected to generate 1.75 times more return on investment than Stepan. However, Acme United is 1.75 times more volatile than Stepan Company. It trades about 0.06 of its potential returns per unit of risk. Stepan Company is currently generating about -0.01 per unit of risk. If you would invest 2,527 in Acme United on August 31, 2024 and sell it today you would earn a total of 1,908 from holding Acme United or generate 75.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Stepan Company
Performance |
| Timeline |
| Acme United |
| Stepan Company |
Acme United and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Stepan
The main advantage of trading using opposite Acme United and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United 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.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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