Correlation Between Sociedad Quimica and Stepan
Can any of the company-specific risk be diversified away by investing in both Sociedad Quimica 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 Sociedad Quimica and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sociedad Quimica y and Stepan Company, you can compare the effects of market volatilities on Sociedad Quimica 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 Sociedad Quimica with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad Quimica and Stepan.
Diversification Opportunities for Sociedad Quimica and Stepan
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sociedad and Stepan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Quimica y and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Sociedad Quimica 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 Sociedad Quimica y 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 Sociedad Quimica i.e., Sociedad Quimica and Stepan go up and down completely randomly.
Pair Corralation between Sociedad Quimica and Stepan
Considering the 90-day investment horizon Sociedad Quimica y is expected to generate 1.13 times more return on investment than Stepan. However, Sociedad Quimica is 1.13 times more volatile than Stepan Company. It trades about 0.25 of its potential returns per unit of risk. Stepan Company is currently generating about -0.16 per unit of risk. If you would invest 3,730 in Sociedad Quimica y on October 24, 2024 and sell it today you would earn a total of 286.00 from holding Sociedad Quimica y or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sociedad Quimica y vs. Stepan Company
Performance |
| Timeline |
| Sociedad Quimica y |
| Stepan Company |
Sociedad Quimica and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sociedad Quimica and Stepan
The main advantage of trading using opposite Sociedad Quimica and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sociedad Quimica 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.| Sociedad Quimica vs. Linde plc Ordinary | Sociedad Quimica vs. Air Products and | Sociedad Quimica vs. Sherwin Williams Co | Sociedad Quimica vs. Albemarle Corp |
| Stepan vs. Orion Engineered Carbons | Stepan vs. International Flavors Fragrances | Stepan vs. Sociedad Quimica y | Stepan vs. Albemarle Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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