Correlation Between Stepan and Northann Corp
Can any of the company-specific risk be diversified away by investing in both Stepan and Northann Corp 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 Northann Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Northann Corp, you can compare the effects of market volatilities on Stepan and Northann Corp 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 Northann Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Northann Corp.
Diversification Opportunities for Stepan and Northann Corp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stepan and Northann is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Northann Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northann 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 Northann Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northann Corp has no effect on the direction of Stepan i.e., Stepan and Northann Corp go up and down completely randomly.
Pair Corralation between Stepan and Northann Corp
Considering the 90-day investment horizon Stepan is expected to generate 11.54 times less return on investment than Northann Corp. But when comparing it to its historical volatility, Stepan Company is 6.26 times less risky than Northann Corp. It trades about 0.08 of its potential returns per unit of risk. Northann Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Northann Corp on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Northann Corp or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Northann Corp
Performance |
| Timeline |
| Stepan Company |
| Northann Corp |
Stepan and Northann Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Northann Corp
The main advantage of trading using opposite Stepan and Northann Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Northann Corp 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 Northann Corp will offset losses from the drop in Northann Corp's long position.The idea behind Stepan Company and Northann 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.| Northann Corp vs. Codexis | Northann Corp vs. Playa Hotels Resorts | Northann Corp vs. Kura Sushi USA | Northann Corp vs. Stepan Company |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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