Correlation Between Simulations Plus and Stepan

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

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

Diversification Opportunities for Simulations Plus and Stepan

-0.56

Correlation Coefficient

Simulations Plus  Stepan

Excellent diversification

The 3 months correlation between Simulations and Stepan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Simulations Plus and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Simulations Plus 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 Simulations Plus are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Simulations Plus i.e., Simulations Plus and Stepan go up and down completely randomly.

Pair Corralation between Simulations Plus and Stepan

Considering the 90-day investment horizon Simulations Plus is expected to under-perform the Stepan. In addition to that, Simulations Plus is 2.64 times more volatile than Stepan Company. It trades about -0.24 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.04 per unit of volatility. If you would invest  5,320  in Stepan Company on May 3, 2025 and sell it today you would lose (324.50) from holding Stepan Company or give up 6.1% of portfolio value over 90 days.

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

Simulations Plus  vs.  Stepan Company

Simulations Plus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simulations Plus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 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.

Pair Trading with Simulations Plus and Stepan

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

The idea behind Simulations Plus and Stepan Company 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.