Correlation Between Stepan and 06406RBK2
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By analyzing existing cross correlation between Stepan Company and BK 4596 26 JUL 30, you can compare the effects of market volatilities on Stepan and 06406RBK2 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 06406RBK2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and 06406RBK2.
Diversification Opportunities for Stepan and 06406RBK2
Good diversification
The 3 months correlation between Stepan and 06406RBK2 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and BK 4596 26 JUL 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK 4596 26 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 06406RBK2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK 4596 26 has no effect on the direction of Stepan i.e., Stepan and 06406RBK2 go up and down completely randomly.
Pair Corralation between Stepan and 06406RBK2
Considering the 90-day investment horizon Stepan Company is expected to under-perform the 06406RBK2. In addition to that, Stepan is 4.5 times more volatile than BK 4596 26 JUL 30. It trades about -0.01 of its total potential returns per unit of risk. BK 4596 26 JUL 30 is currently generating about -0.01 per unit of volatility. If you would invest 9,867 in BK 4596 26 JUL 30 on August 29, 2024 and sell it today you would lose (113.00) from holding BK 4596 26 JUL 30 or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.46% |
| Values | Daily Returns |
Stepan Company vs. BK 4596 26 JUL 30
Performance |
| Timeline |
| Stepan Company |
| BK 4596 26 |
Stepan and 06406RBK2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and 06406RBK2
The main advantage of trading using opposite Stepan and 06406RBK2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, 06406RBK2 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 06406RBK2 will offset losses from the drop in 06406RBK2's long position.The idea behind Stepan Company and BK 4596 26 JUL 30 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.| 06406RBK2 vs. Western Sierra Mining | 06406RBK2 vs. IPG Photonics | 06406RBK2 vs. NioCorp Developments Ltd | 06406RBK2 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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