Correlation Between Stepan and Neogen

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

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

Diversification Opportunities for Stepan and Neogen

-0.02

Correlation Coefficient

Stepan  Neogen

Good diversification

The 3 months correlation between Stepan and Neogen is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Stepan i.e., Stepan and Neogen go up and down completely randomly.

Pair Corralation between Stepan and Neogen

Considering the 90-day investment horizon Stepan Company is expected to under-perform the Neogen. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 1.52 times less risky than Neogen. The stock trades about -0.19 of its potential returns per unit of risk. The Neogen is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Neogen on May 2, 2025 and sell it today you would lose (43.00) from holding Neogen or give up 8.46% of portfolio value over 90 days.

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

Stepan Company  vs.  Neogen

Stepan Company

Risk-Adjusted Performance

Very Weak

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.

Neogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Stepan and Neogen

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

The idea behind Stepan Company and Neogen 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.