Correlation Between AviChina Industry and Coupang LLC

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

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

Diversification Opportunities for AviChina Industry and Coupang LLC

-0.05

Correlation Coefficient

AviChina Industry  Coupang LLC

Good diversification

The 3 months correlation between AviChina and Coupang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AviChina Industry Technology and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and AviChina Industry 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 AviChina Industry Technology 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 AviChina Industry i.e., AviChina Industry and Coupang LLC go up and down completely randomly.

Pair Corralation between AviChina Industry and Coupang LLC

Assuming the 90 days horizon AviChina Industry Technology is expected to under-perform the Coupang LLC. But the pink sheet apears to be less risky and, when comparing its historical volatility, AviChina Industry Technology is 1.42 times less risky than Coupang LLC. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Coupang LLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Coupang LLC on September 3, 2024 and sell it today you would earn a total of  336.00  from holding Coupang LLC or generate 15.27% return on investment over 90 days.

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

AviChina Industry Technology  vs.  Coupang LLC

AviChina Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AviChina Industry Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Coupang LLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Coupang LLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AviChina Industry and Coupang LLC

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

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.