Correlation Between Stepan and Core Molding

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

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

Diversification Opportunities for Stepan and Core Molding

0.07

Correlation Coefficient

Stepan  Core Molding

Significant diversification

The 3 months correlation between Stepan and Core is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies 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 Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Stepan i.e., Stepan and Core Molding go up and down completely randomly.

Pair Corralation between Stepan and Core Molding

Considering the 90-day investment horizon Stepan Company is expected to under-perform the Core Molding. In addition to that, Stepan is 1.28 times more volatile than Core Molding Technologies. It trades about -0.06 of its total potential returns per unit of risk. Core Molding Technologies is currently generating about 0.1 per unit of volatility. If you would invest  1,560  in Core Molding Technologies on May 16, 2025 and sell it today you would earn a total of  155.00  from holding Core Molding Technologies or generate 9.94% return on investment over 90 days.

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

Stepan Company  vs.  Core Molding Technologies

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 uncertain 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.

Core Molding Technologies

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Core Molding Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Core Molding may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Stepan and Core Molding

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

The idea behind Stepan Company and Core Molding Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.