Correlation Between Canlan Ice and Coupang LLC

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

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

Diversification Opportunities for Canlan Ice and Coupang LLC

0.67

Correlation Coefficient

Canlan Ice  Coupang LLC

Poor diversification

The 3 months correlation between Canlan and Coupang is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and Coupang LLC go up and down completely randomly.

Pair Corralation between Canlan Ice and Coupang LLC

Assuming the 90 days horizon Canlan Ice is expected to generate 9.73 times less return on investment than Coupang LLC. But when comparing it to its historical volatility, Canlan Ice Sports is 16.17 times less risky than Coupang LLC. It trades about 0.18 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Coupang LLC on August 31, 2024 and sell it today you would earn a total of  347.00  from holding Coupang LLC or generate 15.77% return on investment over 90 days.

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

Canlan Ice Sports  vs.  Coupang LLC

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Coupang LLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Coupang LLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canlan Ice and Coupang LLC

The main advantage of trading using opposite Canlan Ice and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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 Canlan Ice Sports 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.