Correlation Between National CineMedia and Stepan

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Can any of the company-specific risk be diversified away by investing in both National CineMedia 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 National CineMedia and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Stepan Company, you can compare the effects of market volatilities on National CineMedia 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 National CineMedia with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Stepan.

Diversification Opportunities for National CineMedia and Stepan

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between National and Stepan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Stepan go up and down completely randomly.

Pair Corralation between National CineMedia and Stepan

Given the investment horizon of 90 days National CineMedia is expected to under-perform the Stepan. In addition to that, National CineMedia is 1.24 times more volatile than Stepan Company. It trades about -0.06 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.05 per unit of volatility. If you would invest  7,445  in Stepan Company on August 31, 2024 and sell it today you would earn a total of  164.00  from holding Stepan Company or generate 2.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

National CineMedia  vs.  Stepan Company

 Performance 
       Timeline  
National CineMedia 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Stepan Company 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Stepan Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Stepan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

National CineMedia and Stepan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National CineMedia and Stepan

The main advantage of trading using opposite National CineMedia and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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.
The idea behind National CineMedia and Stepan Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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