Correlation Between Aldel Financial and Stepan
Can any of the company-specific risk be diversified away by investing in both Aldel Financial 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 Aldel Financial and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Stepan Company, you can compare the effects of market volatilities on Aldel Financial 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 Aldel Financial with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Stepan.
Diversification Opportunities for Aldel Financial and Stepan
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aldel and Stepan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Aldel Financial 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 Aldel Financial II 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 Aldel Financial i.e., Aldel Financial and Stepan go up and down completely randomly.
Pair Corralation between Aldel Financial and Stepan
Assuming the 90 days horizon Aldel Financial II is expected to generate 0.06 times more return on investment than Stepan. However, Aldel Financial II is 16.47 times less risky than Stepan. It trades about 0.11 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 999.00 in Aldel Financial II on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Aldel Financial II or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.04% |
| Values | Daily Returns |
Aldel Financial II vs. Stepan Company
Performance |
| Timeline |
| Aldel Financial II |
| Stepan Company |
Aldel Financial and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Stepan
The main advantage of trading using opposite Aldel Financial and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial 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.| Aldel Financial vs. Voyager Acquisition Corp | Aldel Financial vs. dMY Squared Technology | Aldel Financial vs. YHN Acquisition I | Aldel Financial vs. Vine Hill Capital |
| Stepan vs. Minerals Technologies | Stepan vs. Oil Dri | Stepan vs. Quaker Chemical | Stepan vs. Sensient Technologies |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |