Correlation Between Stepan and OZ Minerals
Can any of the company-specific risk be diversified away by investing in both Stepan and OZ Minerals 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 OZ Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and OZ Minerals Limited, you can compare the effects of market volatilities on Stepan and OZ Minerals 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 OZ Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and OZ Minerals.
Diversification Opportunities for Stepan and OZ Minerals
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and OZMLF is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and OZ Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OZ Minerals Limited 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 OZ Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OZ Minerals Limited has no effect on the direction of Stepan i.e., Stepan and OZ Minerals go up and down completely randomly.
Pair Corralation between Stepan and OZ Minerals
If you would invest 1,900 in OZ Minerals Limited on August 29, 2024 and sell it today you would earn a total of 0.00 from holding OZ Minerals Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 2.33% |
| Values | Daily Returns |
Stepan Company vs. OZ Minerals Limited
Performance |
| Timeline |
| Stepan Company |
| OZ Minerals Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stepan and OZ Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and OZ Minerals
The main advantage of trading using opposite Stepan and OZ Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, OZ Minerals 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 OZ Minerals will offset losses from the drop in OZ Minerals' long position.The idea behind Stepan Company and OZ Minerals Limited 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.| OZ Minerals vs. Stepan Company | OZ Minerals vs. Ryanair Holdings PLC | OZ Minerals vs. Verra Mobility Corp | OZ Minerals vs. JD Sports Fashion |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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