Correlation Between Stepan and AptarGroup

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

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

Diversification Opportunities for Stepan and AptarGroup

0.79

Correlation Coefficient

Stepan  AptarGroup

Poor diversification

The 3 months correlation between Stepan and AptarGroup is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup 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 AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Stepan i.e., Stepan and AptarGroup go up and down completely randomly.

Pair Corralation between Stepan and AptarGroup

Considering the 90-day investment horizon Stepan Company is expected to generate 1.28 times more return on investment than AptarGroup. However, Stepan is 1.28 times more volatile than AptarGroup. It trades about -0.05 of its potential returns per unit of risk. AptarGroup is currently generating about -0.09 per unit of risk. If you would invest  5,475  in Stepan Company on May 28, 2025 and sell it today you would lose (420.00) from holding Stepan Company or give up 7.67% of portfolio value over 90 days.

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

Stepan Company  vs.  AptarGroup

Stepan Company

Risk-Adjusted Performance

Weakest

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.

AptarGroup

Risk-Adjusted Performance

Weakest

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Stepan and AptarGroup

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

The idea behind Stepan Company and AptarGroup 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.