Correlation Between Stepan and China Clean
Can any of the company-specific risk be diversified away by investing in both Stepan and China Clean 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 China Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and China Clean Energy, you can compare the effects of market volatilities on Stepan and China Clean 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 China Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and China Clean.
Diversification Opportunities for Stepan and China Clean
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stepan and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and China Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Clean Energy 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 China Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Clean Energy has no effect on the direction of Stepan i.e., Stepan and China Clean go up and down completely randomly.
Pair Corralation between Stepan and China Clean
If you would invest 0.01 in China Clean Energy on September 1, 2024 and sell it today you would earn a total of 0.00 from holding China Clean Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Stepan Company vs. China Clean Energy
Performance |
| Timeline |
| Stepan Company |
| China Clean Energy |
Stepan and China Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and China Clean
The main advantage of trading using opposite Stepan and China Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, China Clean 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 China Clean will offset losses from the drop in China Clean's long position.The idea behind Stepan Company and China Clean Energy 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.| China Clean vs. Elmos Semiconductor SE | China Clean vs. National Beverage Corp | China Clean vs. Analog Devices | China Clean vs. MagnaChip Semiconductor |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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