Correlation Between Stepan and Contextlogic

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

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

Diversification Opportunities for Stepan and Contextlogic

0.13

Correlation Coefficient

Stepan  Contextlogic

Average diversification

The 3 months correlation between Stepan and Contextlogic is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic 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 Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of Stepan i.e., Stepan and Contextlogic go up and down completely randomly.

Pair Corralation between Stepan and Contextlogic

Considering the 90-day investment horizon Stepan Company is expected to under-perform the Contextlogic. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 1.39 times less risky than Contextlogic. The stock trades about -0.05 of its potential returns per unit of risk. The Contextlogic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Contextlogic on April 21, 2025 and sell it today you would earn a total of  164.00  from holding Contextlogic or generate 28.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.91%
Values	Daily Returns

Stepan Company  vs.  Contextlogic

Stepan Company

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stepan Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Stepan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Contextlogic

Risk-Adjusted Performance

Modest

Over the last 90 days Contextlogic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Contextlogic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stepan and Contextlogic

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

The idea behind Stepan Company and Contextlogic 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.