Correlation Between Stepan and U S Cellular

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

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

Diversification Opportunities for Stepan and U S Cellular

-0.39

Correlation Coefficient

Stepan  U S Cellular

Very good diversification

The 3 months correlation between Stepan and USM is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 U S Cellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Stepan i.e., Stepan and U S Cellular go up and down completely randomly.

Pair Corralation between Stepan and U S Cellular

Considering the 90-day investment horizon Stepan Company is expected to under-perform the U S Cellular. In addition to that, Stepan is 1.24 times more volatile than United States Cellular. It trades about -0.06 of its total potential returns per unit of risk. United States Cellular is currently generating about 0.2 per unit of volatility. If you would invest  6,180  in United States Cellular on May 16, 2025 and sell it today you would earn a total of  1,418  from holding United States Cellular or generate 22.94% return on investment over 90 days.

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

Stepan Company  vs.  United States Cellular

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.

United States Cellular

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, U S Cellular displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stepan and U S Cellular

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

The idea behind Stepan Company and United States Cellular 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.