Correlation Between Stepan and Phunware

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

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

Diversification Opportunities for Stepan and Phunware

-0.12

Correlation Coefficient

Stepan  Phunware

Good diversification

The 3 months correlation between Stepan and Phunware is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Phunware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phunware 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 Phunware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phunware has no effect on the direction of Stepan i.e., Stepan and Phunware go up and down completely randomly.

Pair Corralation between Stepan and Phunware

If you would invest  20.00  in Phunware on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Phunware or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.3%
Values	Daily Returns

Stepan Company  vs.  Phunware

Stepan Company

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stepan Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Stepan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Phunware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phunware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Phunware is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Stepan and Phunware

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

The idea behind Stepan Company and Phunware 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 Anywhere module to track or share privately all of your investments from the convenience of any device.