Correlation Between InPlay Oil and Coupang

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Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Coupang 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 InPlay Oil and Coupang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Coupang, you can compare the effects of market volatilities on InPlay Oil and Coupang 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 InPlay Oil with a short position of Coupang. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Coupang.

Diversification Opportunities for InPlay Oil and Coupang

InPlayCoupangDiversified AwayInPlayCoupangDiversified Away100%
0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between InPlay and Coupang is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Coupang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with Coupang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang has no effect on the direction of InPlay Oil i.e., InPlay Oil and Coupang go up and down completely randomly.

Pair Corralation between InPlay Oil and Coupang

Assuming the 90 days trading horizon InPlay Oil is expected to generate 1.4 times less return on investment than Coupang. In addition to that, InPlay Oil is 2.03 times more volatile than Coupang. It trades about 0.06 of its total potential returns per unit of risk. Coupang is currently generating about 0.17 per unit of volatility. If you would invest  2,169  in Coupang on November 26, 2024 and sell it today you would earn a total of  229.00  from holding Coupang or generate 10.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

InPlay Oil Corp  vs.  Coupang

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.158DA1 788
       Timeline  
InPlay Oil Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, InPlay Oil is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.051.11.151.2
Coupang 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Coupang are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coupang is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2121.52222.52323.52424.5

InPlay Oil and Coupang Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.32-3.23-2.15-1.070.01.042.113.184.255.32 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.158DA1 788
       Returns  

Pair Trading with InPlay Oil and Coupang

The main advantage of trading using opposite InPlay Oil and Coupang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Coupang 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 will offset losses from the drop in Coupang's long position.
The idea behind InPlay Oil Corp and Coupang 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.
Check out your portfolio center.
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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