Correlation Between Inflection Point and Stepan
Can any of the company-specific risk be diversified away by investing in both Inflection Point 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 Inflection Point and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflection Point Acquisition and Stepan Company, you can compare the effects of market volatilities on Inflection Point 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 Inflection Point with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and Stepan.
Diversification Opportunities for Inflection Point and Stepan
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inflection and Stepan is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Inflection Point 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 Inflection Point Acquisition 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 Inflection Point i.e., Inflection Point and Stepan go up and down completely randomly.
Pair Corralation between Inflection Point and Stepan
Assuming the 90 days horizon Inflection Point Acquisition is expected to generate 24.63 times more return on investment than Stepan. However, Inflection Point is 24.63 times more volatile than Stepan Company. It trades about 0.05 of its potential returns per unit of risk. Stepan Company is currently generating about -0.06 per unit of risk. If you would invest 0.00 in Inflection Point Acquisition on January 17, 2025 and sell it today you would earn a total of 1,057 from holding Inflection Point Acquisition or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.7% |
| Values | Daily Returns |
Inflection Point Acquisition vs. Stepan Company
Performance |
| Timeline |
| Inflection Point Acq |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Stepan Company |
Inflection Point and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflection Point and Stepan
The main advantage of trading using opposite Inflection Point and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflection Point 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.| Inflection Point vs. PennantPark Floating Rate | Inflection Point vs. Stepstone Group | Inflection Point vs. Highway Holdings Limited | Inflection Point vs. Simpson Manufacturing |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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