Correlation Between Stepan and Alphatec Holdings
Can any of the company-specific risk be diversified away by investing in both Stepan and Alphatec Holdings 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 Alphatec Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Alphatec Holdings, you can compare the effects of market volatilities on Stepan and Alphatec Holdings 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 Alphatec Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Alphatec Holdings.
Diversification Opportunities for Stepan and Alphatec Holdings
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepan and Alphatec is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings 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 Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of Stepan i.e., Stepan and Alphatec Holdings go up and down completely randomly.
Pair Corralation between Stepan and Alphatec Holdings
Considering the 90-day investment horizon Stepan Company is expected to generate 0.72 times more return on investment than Alphatec Holdings. However, Stepan Company is 1.38 times less risky than Alphatec Holdings. It trades about 0.24 of its potential returns per unit of risk. Alphatec Holdings is currently generating about -0.3 per unit of risk. If you would invest 5,475 in Stepan Company on April 7, 2025 and sell it today you would earn a total of 450.00 from holding Stepan Company or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Alphatec Holdings
Performance |
| Timeline |
| Stepan Company |
| Alphatec Holdings |
Stepan and Alphatec Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Alphatec Holdings
The main advantage of trading using opposite Stepan and Alphatec Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Alphatec Holdings 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 Alphatec Holdings will offset losses from the drop in Alphatec Holdings' long position.| Stepan vs. Marine Products | Stepan vs. LG Display Co | Stepan vs. Fevertree Drinks Plc | Stepan vs. United Parks Resorts |
| Alphatec Holdings vs. Usio Inc | Alphatec Holdings vs. Procter Gamble | Alphatec Holdings vs. Allient | Alphatec Holdings vs. Toro Co |
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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