Correlation Between Chester Mining and Stepan

Can any of the company-specific risk be diversified away by investing in both Chester Mining 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 Chester Mining and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chester Mining and Stepan Company, you can compare the effects of market volatilities on Chester Mining 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 Chester Mining with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chester Mining and Stepan.

Diversification Opportunities for Chester Mining and Stepan

0.0

Correlation Coefficient

Chester Mining  Stepan

Pay attention - limited upside

The 3 months correlation between Chester and Stepan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chester Mining and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Chester Mining 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 Chester Mining 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 Chester Mining i.e., Chester Mining and Stepan go up and down completely randomly.

Pair Corralation between Chester Mining and Stepan

If you would invest  0.02  in Chester Mining on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Chester Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chester Mining  vs.  Stepan Company

Chester Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chester Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Chester Mining is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Stepan Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stepan Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Chester Mining and Stepan

The main advantage of trading using opposite Chester Mining and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chester Mining 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.

The idea behind Chester Mining and Stepan Company 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.

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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.