Correlation Between Stepan and Fly E

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

By analyzing existing cross correlation between Stepan Company and Fly E Group, Common, you can compare the effects of market volatilities on Stepan and Fly E 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 Fly E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Fly E.

Diversification Opportunities for Stepan and Fly E

0.11

Correlation Coefficient

Stepan  Fly E

Average diversification

The 3 months correlation between Stepan and Fly is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, 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 Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Stepan i.e., Stepan and Fly E go up and down completely randomly.

Pair Corralation between Stepan and Fly E

Considering the 90-day investment horizon Stepan Company is expected to under-perform the Fly E. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 4.43 times less risky than Fly E. The stock trades about -0.46 of its potential returns per unit of risk. The Fly E Group, Common is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Fly E Group, Common on September 25, 2024 and sell it today you would lose (1.00) from holding Fly E Group, Common or give up 2.22% of portfolio value over 90 days.

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

Stepan Company  vs.  Fly E Group, Common

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 latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Fly E Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fly E Group, Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Stepan and Fly E

The main advantage of trading using opposite Stepan and Fly E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Fly E 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 Fly E will offset losses from the drop in Fly E's long position.

The idea behind Stepan Company and Fly E Group, Common 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.