Correlation Between Stepan and Highest Performances
Can any of the company-specific risk be diversified away by investing in both Stepan and Highest Performances 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 Highest Performances into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Highest Performances Holdings, you can compare the effects of market volatilities on Stepan and Highest Performances 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 Highest Performances. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Highest Performances.
Diversification Opportunities for Stepan and Highest Performances
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stepan and Highest is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Highest Performances Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highest Performances 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 Highest Performances. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highest Performances has no effect on the direction of Stepan i.e., Stepan and Highest Performances go up and down completely randomly.
Pair Corralation between Stepan and Highest Performances
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Highest Performances. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 2.72 times less risky than Highest Performances. The stock trades about -0.13 of its potential returns per unit of risk. The Highest Performances Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Highest Performances Holdings on September 12, 2024 and sell it today you would lose (1.00) from holding Highest Performances Holdings or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Highest Performances Holdings
Performance |
| Timeline |
| Stepan Company |
| Highest Performances |
Stepan and Highest Performances Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Highest Performances
The main advantage of trading using opposite Stepan and Highest Performances positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Highest Performances 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 Highest Performances will offset losses from the drop in Highest Performances' long position.The idea behind Stepan Company and Highest Performances Holdings 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.| Highest Performances vs. Iridium Communications | Highest Performances vs. Radcom | Highest Performances vs. Stepan Company | Highest Performances vs. Academy Sports Outdoors |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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