Correlation Between Coupang LLC and Arrow Electronics

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

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

Diversification Opportunities for Coupang LLC and Arrow Electronics

0.4

Correlation Coefficient

Coupang LLC  Arrow Electronics

Very weak diversification

The 3 months correlation between Coupang and Arrow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Coupang LLC 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 Coupang LLC are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Coupang LLC i.e., Coupang LLC and Arrow Electronics go up and down completely randomly.

Pair Corralation between Coupang LLC and Arrow Electronics

Given the investment horizon of 90 days Coupang LLC is expected to under-perform the Arrow Electronics. In addition to that, Coupang LLC is 1.19 times more volatile than Arrow Electronics. It trades about -0.14 of its total potential returns per unit of risk. Arrow Electronics is currently generating about 0.05 per unit of volatility. If you would invest  11,372  in Arrow Electronics on September 20, 2024 and sell it today you would earn a total of  170.00  from holding Arrow Electronics or generate 1.49% return on investment over 90 days.

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

Coupang LLC  vs.  Arrow Electronics

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 nearly stable basic indicators, Coupang LLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Coupang LLC and Arrow Electronics

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

The idea behind Coupang LLC and Arrow Electronics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.