Correlation Between Coupang LLC and ALLEGION

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

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

Diversification Opportunities for Coupang LLC and ALLEGION

0.52

Correlation Coefficient

Coupang LLC  ALLEGION

Very weak diversification

The 3 months correlation between Coupang and ALLEGION is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and ALLEGION HLDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLEGION HLDG 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 ALLEGION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLEGION HLDG INC has no effect on the direction of Coupang LLC i.e., Coupang LLC and ALLEGION go up and down completely randomly.

Pair Corralation between Coupang LLC and ALLEGION

Given the investment horizon of 90 days Coupang LLC is expected to under-perform the ALLEGION. In addition to that, Coupang LLC is 6.99 times more volatile than ALLEGION HLDG INC. It trades about -0.04 of its total potential returns per unit of risk. ALLEGION HLDG INC is currently generating about -0.12 per unit of volatility. If you would invest  9,773  in ALLEGION HLDG INC on September 27, 2024 and sell it today you would lose (225.00) from holding ALLEGION HLDG INC or give up 2.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Coupang LLC  vs.  ALLEGION HLDG 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 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.

ALLEGION HLDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLEGION HLDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLEGION is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Coupang LLC and ALLEGION

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

The idea behind Coupang LLC and ALLEGION HLDG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.