Correlation Between Coupang LLC and BCE

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

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

Diversification Opportunities for Coupang LLC and BCE

0.54

Correlation Coefficient

Coupang LLC  BCE

Very weak diversification

The 3 months correlation between Coupang and BCE is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Coupang LLC i.e., Coupang LLC and BCE go up and down completely randomly.

Pair Corralation between Coupang LLC and BCE

Given the investment horizon of 90 days Coupang LLC is expected to generate 1.41 times more return on investment than BCE. However, Coupang LLC is 1.41 times more volatile than BCE Inc. It trades about -0.15 of its potential returns per unit of risk. BCE Inc is currently generating about -0.45 per unit of risk. If you would invest  2,432  in Coupang LLC on September 23, 2024 and sell it today you would lose (138.00) from holding Coupang LLC or give up 5.67% of portfolio value over 90 days.

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

Coupang LLC  vs.  BCE Inc

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Coupang LLC and BCE

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

The idea behind Coupang LLC and BCE Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.