Correlation Between Caravelle International and Stepan
Can any of the company-specific risk be diversified away by investing in both Caravelle International 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 Caravelle International and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caravelle International Group and Stepan Company, you can compare the effects of market volatilities on Caravelle International 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 Caravelle International with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caravelle International and Stepan.
Diversification Opportunities for Caravelle International and Stepan
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caravelle and Stepan is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Caravelle International Group and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Caravelle International 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 Caravelle International Group 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 Caravelle International i.e., Caravelle International and Stepan go up and down completely randomly.
Pair Corralation between Caravelle International and Stepan
Given the investment horizon of 90 days Caravelle International Group is expected to generate 9.07 times more return on investment than Stepan. However, Caravelle International is 9.07 times more volatile than Stepan Company. It trades about 0.22 of its potential returns per unit of risk. Stepan Company is currently generating about -0.16 per unit of risk. If you would invest 250.00 in Caravelle International Group on October 24, 2024 and sell it today you would earn a total of 127.00 from holding Caravelle International Group or generate 50.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caravelle International Group vs. Stepan Company
Performance |
| Timeline |
| Caravelle International |
| Stepan Company |
Caravelle International and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caravelle International and Stepan
The main advantage of trading using opposite Caravelle International and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caravelle International 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.| Caravelle International vs. Stepan Company | Caravelle International vs. National Rural Utilities | Caravelle International vs. Western Copper and | Caravelle International vs. Transportadora de Gas |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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