Correlation Between Coupang LLC and Gfl Environmental

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

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

Diversification Opportunities for Coupang LLC and Gfl Environmental

-0.37

Correlation Coefficient

Coupang LLC  Gfl Environmental

Very good diversification

The 3 months correlation between Coupang and Gfl is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental and Coupang LLC 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 Coupang LLC are associated (or correlated) with Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Coupang LLC i.e., Coupang LLC and Gfl Environmental go up and down completely randomly.

Pair Corralation between Coupang LLC and Gfl Environmental

Given the investment horizon of 90 days Coupang LLC is expected to generate 1.56 times more return on investment than Gfl Environmental. However, Coupang LLC is 1.56 times more volatile than Gfl Environmental Holdings. It trades about -0.11 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about -0.34 per unit of risk. If you would invest  2,280  in Coupang LLC on October 22, 2024 and sell it today you would lose (74.00) from holding Coupang LLC or give up 3.25% of portfolio value over 90 days.

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

Coupang LLC  vs.  Gfl Environmental Holdings

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 inconsistent 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.

Gfl Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gfl Environmental Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Gfl Environmental is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Coupang LLC and Gfl Environmental

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

The idea behind Coupang LLC and Gfl Environmental Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.