Correlation Between Couchbase and Remitly Global

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

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

Diversification Opportunities for Couchbase and Remitly Global

0.86

Correlation Coefficient

Couchbase  Remitly Global

Very poor diversification

The 3 months correlation between Couchbase and Remitly is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Couchbase and Remitly Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remitly Global and Couchbase 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 Couchbase are associated (or correlated) with Remitly Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remitly Global has no effect on the direction of Couchbase i.e., Couchbase and Remitly Global go up and down completely randomly.

Pair Corralation between Couchbase and Remitly Global

Given the investment horizon of 90 days Couchbase is expected to generate 1.44 times more return on investment than Remitly Global. However, Couchbase is 1.44 times more volatile than Remitly Global. It trades about -0.01 of its potential returns per unit of risk. Remitly Global is currently generating about -0.04 per unit of risk. If you would invest  1,524  in Couchbase on December 27, 2024 and sell it today you would lose (71.00) from holding Couchbase or give up 4.66% of portfolio value over 90 days.

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

Couchbase  vs.  Remitly Global

Couchbase

Risk-Adjusted Performance

Very Weak

Over the last 90 days Couchbase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Couchbase is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Remitly Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Remitly Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Remitly Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Couchbase and Remitly Global

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

The idea behind Couchbase and Remitly Global 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.