Correlation Between Stepan and Videolocity International

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

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

Diversification Opportunities for Stepan and Videolocity International

0.0

Correlation Coefficient

Stepan  Videolocity International

Pay attention - limited upside

The 3 months correlation between Stepan and Videolocity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Videolocity International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Videolocity International 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 Videolocity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Videolocity International has no effect on the direction of Stepan i.e., Stepan and Videolocity International go up and down completely randomly.

Pair Corralation between Stepan and Videolocity International

If you would invest  0.01  in Videolocity International on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Videolocity International 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

Stepan Company  vs.  Videolocity International

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 weak 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.

Videolocity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Videolocity International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Videolocity International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stepan and Videolocity International

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

The idea behind Stepan Company and Videolocity International 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.