Correlation Between 191216CT5 and Coupang LLC

Can any of the company-specific risk be diversified away by investing in both 191216CT5 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 191216CT5 and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Coupang LLC, you can compare the effects of market volatilities on 191216CT5 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 191216CT5 with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216CT5 and Coupang LLC.

Diversification Opportunities for 191216CT5 and Coupang LLC

0.28

Correlation Coefficient

191216CT5  Coupang LLC

Modest diversification

The 3 months correlation between 191216CT5 and Coupang is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and 191216CT5 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 COCA COLA CO 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 191216CT5 i.e., 191216CT5 and Coupang LLC go up and down completely randomly.

Pair Corralation between 191216CT5 and Coupang LLC

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 0.19 times more return on investment than Coupang LLC. However, COCA COLA CO is 5.28 times less risky than Coupang LLC. It trades about -0.05 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.05 per unit of risk. If you would invest  9,769  in COCA COLA CO on September 25, 2024 and sell it today you would lose (127.00) from holding COCA COLA CO or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

COCA COLA CO  vs.  Coupang LLC

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CT5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with 191216CT5 and Coupang LLC

The main advantage of trading using opposite 191216CT5 and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216CT5 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 COCA COLA CO 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.