Correlation Between CVW CleanTech and Stepan
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech 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 CVW CleanTech and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Stepan Company, you can compare the effects of market volatilities on CVW CleanTech 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 CVW CleanTech with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Stepan.
Diversification Opportunities for CVW CleanTech and Stepan
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVW and Stepan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech i.e., CVW CleanTech and Stepan go up and down completely randomly.
Pair Corralation between CVW CleanTech and Stepan
Assuming the 90 days horizon CVW CleanTech is expected to generate 4.81 times more return on investment than Stepan. However, CVW CleanTech is 4.81 times more volatile than Stepan Company. It trades about 0.04 of its potential returns per unit of risk. Stepan Company is currently generating about -0.02 per unit of risk. If you would invest 52.00 in CVW CleanTech on September 4, 2024 and sell it today you would earn a total of 9.00 from holding CVW CleanTech or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CVW CleanTech vs. Stepan Company
Performance |
| Timeline |
| CVW CleanTech |
| Stepan Company |
CVW CleanTech and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Stepan
The main advantage of trading using opposite CVW CleanTech and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech 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.| CVW CleanTech vs. Meiwu Technology Co | CVW CleanTech vs. CECO Environmental Corp | CVW CleanTech vs. Iridium Communications | CVW CleanTech vs. Aldel Financial II |
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 CEOs Directory module to screen CEOs from public companies around the world.
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