Correlation Between Stepan and Vast Renewables

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

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

Diversification Opportunities for Stepan and Vast Renewables

-0.76

Correlation Coefficient

Stepan  Vast Renewables

Pay attention - limited upside

The 3 months correlation between Stepan and Vast is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables 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 Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of Stepan i.e., Stepan and Vast Renewables go up and down completely randomly.

Pair Corralation between Stepan and Vast Renewables

Considering the 90-day investment horizon Stepan Company is expected to generate 0.13 times more return on investment than Vast Renewables. However, Stepan Company is 7.69 times less risky than Vast Renewables. It trades about -0.03 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about -0.25 per unit of risk. If you would invest  5,306  in Stepan Company on May 1, 2025 and sell it today you would lose (316.00) from holding Stepan Company or give up 5.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	38.71%
Values	Daily Returns

Stepan Company  vs.  Vast Renewables Limited

Stepan Company

Risk-Adjusted Performance

Insignificant

Over the last 90 days Stepan Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Stepan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Vast Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vast Renewables Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Stepan and Vast Renewables

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

The idea behind Stepan Company and Vast Renewables Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.