Correlation Between Zane Interactive and Stepan

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

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

Diversification Opportunities for Zane Interactive and Stepan

0.0

Correlation Coefficient

Zane Interactive  Stepan

Pay attention - limited upside

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

Pair Corralation between Zane Interactive and Stepan

If you would invest  7,344  in Stepan Company on September 13, 2024 and sell it today you would earn a total of  206.00  from holding Stepan Company or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Zane Interactive Publishing  vs.  Stepan Company

Zane Interactive Pub

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zane Interactive Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Zane Interactive is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Stepan Company

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stepan Company are ranked lower than 2 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Zane Interactive and Stepan

The main advantage of trading using opposite Zane Interactive and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zane Interactive 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 Zane Interactive Publishing 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.