Correlation Between Stepan and Skillful Craftsman
Can any of the company-specific risk be diversified away by investing in both Stepan and Skillful Craftsman 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 Skillful Craftsman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Skillful Craftsman Education, you can compare the effects of market volatilities on Stepan and Skillful Craftsman 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 Skillful Craftsman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Skillful Craftsman.
Diversification Opportunities for Stepan and Skillful Craftsman
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and Skillful is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Skillful Craftsman Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skillful Craftsman 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 Skillful Craftsman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skillful Craftsman has no effect on the direction of Stepan i.e., Stepan and Skillful Craftsman go up and down completely randomly.
Pair Corralation between Stepan and Skillful Craftsman
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Skillful Craftsman. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 3.17 times less risky than Skillful Craftsman. The stock trades about -0.13 of its potential returns per unit of risk. The Skillful Craftsman Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 97.00 in Skillful Craftsman Education on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Skillful Craftsman Education or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Skillful Craftsman Education
Performance |
| Timeline |
| Stepan Company |
| Skillful Craftsman |
Stepan and Skillful Craftsman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Skillful Craftsman
The main advantage of trading using opposite Stepan and Skillful Craftsman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Skillful Craftsman 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 Skillful Craftsman will offset losses from the drop in Skillful Craftsman's long position.The idea behind Stepan Company and Skillful Craftsman Education 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.| Skillful Craftsman vs. Wah Fu Education | Skillful Craftsman vs. Golden Sun Education | Skillful Craftsman vs. Elite Education Group | Skillful Craftsman vs. QuantaSing Group Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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