Correlation Between Natures Miracle and Coupang LLC

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

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

Diversification Opportunities for Natures Miracle and Coupang LLC

-0.21

Correlation Coefficient

Natures Miracle  Coupang LLC

Very good diversification

The 3 months correlation between Natures and Coupang is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Natures Miracle Holding and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Natures Miracle 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 Natures Miracle Holding 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 Natures Miracle i.e., Natures Miracle and Coupang LLC go up and down completely randomly.

Pair Corralation between Natures Miracle and Coupang LLC

Assuming the 90 days horizon Natures Miracle Holding is expected to generate 20.14 times more return on investment than Coupang LLC. However, Natures Miracle is 20.14 times more volatile than Coupang LLC. It trades about 0.15 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.05 per unit of risk. If you would invest  1.69  in Natures Miracle Holding on September 4, 2024 and sell it today you would lose (0.38) from holding Natures Miracle Holding or give up 22.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Natures Miracle Holding  vs.  Coupang LLC

Natures Miracle Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Miracle Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Natures Miracle showed solid returns over the last few months and may actually be approaching a breakup point.

Coupang LLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Coupang LLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Natures Miracle and Coupang LLC

The main advantage of trading using opposite Natures Miracle and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Miracle 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 Natures Miracle Holding 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.