Correlation Between Stepan and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both Stepan and Plum Acquisition 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 Plum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Plum Acquisition Corp, you can compare the effects of market volatilities on Stepan and Plum Acquisition 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Plum Acquisition.
Diversification Opportunities for Stepan and Plum Acquisition
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and Plum is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Stepan i.e., Stepan and Plum Acquisition go up and down completely randomly.
Pair Corralation between Stepan and Plum Acquisition
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Plum Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 53.25 times less risky than Plum Acquisition. The stock trades about -0.04 of its potential returns per unit of risk. The Plum Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.07 in Plum Acquisition Corp on September 14, 2024 and sell it today you would earn a total of 20.93 from holding Plum Acquisition Corp or generate 29900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 49.4% |
| Values | Daily Returns |
Stepan Company vs. Plum Acquisition Corp
Performance |
| Timeline |
| Stepan Company |
| Plum Acquisition Corp |
Stepan and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Plum Acquisition
The main advantage of trading using opposite Stepan and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Plum Acquisition 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| Stepan vs. LyondellBasell Industries NV | Stepan vs. Cabot | Stepan vs. Westlake Chemical | Stepan vs. Air Products and |
| Plum Acquisition vs. Voyager Acquisition Corp | Plum Acquisition vs. YHN Acquisition I | Plum Acquisition vs. CO2 Energy Transition | Plum Acquisition vs. Vine Hill Capital |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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