Correlation Between Coupang LLC and Guangdong Investment

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

By analyzing existing cross correlation between Coupang LLC and Guangdong Investment Limited, you can compare the effects of market volatilities on Coupang LLC and Guangdong Investment 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 Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang LLC and Guangdong Investment.

Diversification Opportunities for Coupang LLC and Guangdong Investment

-0.17

Correlation Coefficient

Coupang LLC  Guangdong Investment

Good diversification

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

Pair Corralation between Coupang LLC and Guangdong Investment

Given the investment horizon of 90 days Coupang LLC is expected to generate 1.11 times more return on investment than Guangdong Investment. However, Coupang LLC is 1.11 times more volatile than Guangdong Investment Limited. It trades about 0.03 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.0 per unit of risk. If you would invest  2,286  in Coupang LLC on December 24, 2024 and sell it today you would earn a total of  48.00  from holding Coupang LLC or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Coupang LLC  vs.  Guangdong Investment Limited

Coupang LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coupang LLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Guangdong Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangdong Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guangdong Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coupang LLC and Guangdong Investment

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

The idea behind Coupang LLC and Guangdong Investment Limited 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.