Correlation Between Cardinal Health and Coupang LLC

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

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

Diversification Opportunities for Cardinal Health and Coupang LLC

-0.38

Correlation Coefficient

Cardinal Health  Coupang LLC

Very good diversification

The 3 months correlation between Cardinal and Coupang is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Cardinal Health 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 Cardinal Health are associated (or correlated) with Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Cardinal Health i.e., Cardinal Health and Coupang LLC go up and down completely randomly.

Pair Corralation between Cardinal Health and Coupang LLC

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.66 times more return on investment than Coupang LLC. However, Cardinal Health is 1.51 times less risky than Coupang LLC. It trades about 0.08 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.05 per unit of risk. If you would invest  10,969  in Cardinal Health on September 24, 2024 and sell it today you would earn a total of  859.00  from holding Cardinal Health or generate 7.83% return on investment over 90 days.

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

Cardinal Health  vs.  Coupang LLC

Cardinal Health

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coupang LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coupang LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cardinal Health and Coupang LLC

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

The idea behind Cardinal Health and Coupang LLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.