Correlation Between Sligro Food and Stepan
Can any of the company-specific risk be diversified away by investing in both Sligro Food and Stepan 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 Sligro Food and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sligro Food Group and Stepan Company, you can compare the effects of market volatilities on Sligro Food and Stepan 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 Sligro Food with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Stepan.
Diversification Opportunities for Sligro Food and Stepan
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sligro and Stepan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Sligro Food 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 Sligro Food Group are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Sligro Food i.e., Sligro Food and Stepan go up and down completely randomly.
Pair Corralation between Sligro Food and Stepan
Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Stepan. In addition to that, Sligro Food is 1.08 times more volatile than Stepan Company. It trades about -0.22 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.09 per unit of volatility. If you would invest 7,387 in Stepan Company on August 27, 2024 and sell it today you would earn a total of 298.00 from holding Stepan Company or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sligro Food Group vs. Stepan Company
Performance |
| Timeline |
| Sligro Food Group |
| Stepan Company |
Sligro Food and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sligro Food and Stepan
The main advantage of trading using opposite Sligro Food and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Sligro Food vs. Legacy Education | Sligro Food vs. NVIDIA | Sligro Food vs. Apple Inc | Sligro Food vs. Microsoft |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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