Correlation Between Stepan and H B

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

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

Diversification Opportunities for Stepan and H B

0.51

Correlation Coefficient

Stepan  H B

Very weak diversification

The 3 months correlation between Stepan and FUL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Stepan i.e., Stepan and H B go up and down completely randomly.

Pair Corralation between Stepan and H B

Considering the 90-day investment horizon Stepan Company is expected to under-perform the H B. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 1.03 times less risky than H B. The stock trades about -0.06 of its potential returns per unit of risk. The H B Fuller is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,444  in H B Fuller on May 21, 2025 and sell it today you would earn a total of  454.00  from holding H B Fuller or generate 8.34% 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.  H B Fuller

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.

H B Fuller

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in H B Fuller are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, H B may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Stepan and H B

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

The idea behind Stepan Company and H B Fuller 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.