Correlation Between STEP Energy and BeWhere Holdings

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

By analyzing existing cross correlation between STEP Energy Services and BeWhere Holdings, you can compare the effects of market volatilities on STEP Energy and BeWhere Holdings 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 STEP Energy with a short position of BeWhere Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEP Energy and BeWhere Holdings.

Diversification Opportunities for STEP Energy and BeWhere Holdings

0.63

Correlation Coefficient

STEP Energy  BeWhere Holdings

Poor diversification

The 3 months correlation between STEP and BeWhere is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding STEP Energy Services and BeWhere Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeWhere Holdings and STEP Energy 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 STEP Energy Services are associated (or correlated) with BeWhere Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeWhere Holdings has no effect on the direction of STEP Energy i.e., STEP Energy and BeWhere Holdings go up and down completely randomly.

Pair Corralation between STEP Energy and BeWhere Holdings

Assuming the 90 days horizon STEP Energy is expected to generate 1.97 times less return on investment than BeWhere Holdings. But when comparing it to its historical volatility, STEP Energy Services is 2.78 times less risky than BeWhere Holdings. It trades about 0.27 of its potential returns per unit of risk. BeWhere Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  47.00  in BeWhere Holdings on May 4, 2025 and sell it today you would earn a total of  21.00  from holding BeWhere Holdings or generate 44.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

STEP Energy Services  vs.  BeWhere Holdings

STEP Energy Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STEP Energy Services are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, STEP Energy reported solid returns over the last few months and may actually be approaching a breakup point.

BeWhere Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BeWhere Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, BeWhere Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STEP Energy and BeWhere Holdings

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

The idea behind STEP Energy Services and BeWhere Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.