Correlation Between Stepan and American Lithium
Can any of the company-specific risk be diversified away by investing in both Stepan and American Lithium 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 Stepan and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and American Lithium Corp, you can compare the effects of market volatilities on Stepan and American Lithium 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 Stepan with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and American Lithium.
Diversification Opportunities for Stepan and American Lithium
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stepan and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Stepan 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 Stepan Company are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Stepan i.e., Stepan and American Lithium go up and down completely randomly.
Pair Corralation between Stepan and American Lithium
If you would invest (100.00) in American Lithium Corp on December 4, 2024 and sell it today you would earn a total of 100.00 from holding American Lithium Corp or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Stepan Company vs. American Lithium Corp
Performance |
| Timeline |
| Stepan Company |
| American Lithium Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Stepan and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and American Lithium
The main advantage of trading using opposite Stepan and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.The idea behind Stepan Company and American Lithium Corp 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.| American Lithium vs. Ameriprise Financial | American Lithium vs. CF Industries Holdings | American Lithium vs. Ambipar Emergency Response | American Lithium vs. Gladstone Investment |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |