Correlation Between Coupang LLC and GSR II

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

Diversification Opportunities for Coupang LLC and GSR II

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Coupang and GSR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora 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 GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Coupang LLC i.e., Coupang LLC and GSR II go up and down completely randomly.

Pair Corralation between Coupang LLC and GSR II

Given the investment horizon of 90 days Coupang LLC is expected to generate 0.52 times more return on investment than GSR II. However, Coupang LLC is 1.92 times less risky than GSR II. It trades about 0.04 of its potential returns per unit of risk. GSR II Meteora is currently generating about -0.12 per unit of risk. If you would invest  1,617  in Coupang LLC on September 6, 2024 and sell it today you would earn a total of  770.00  from holding Coupang LLC or generate 47.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy27.27%
ValuesDaily Returns

Coupang LLC  vs.  GSR II Meteora

 Performance 
       Timeline  
Coupang LLC 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Coupang LLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.
GSR II Meteora 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GSR II Meteora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, GSR II is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Coupang LLC and GSR II Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coupang LLC and GSR II

The main advantage of trading using opposite Coupang LLC and GSR II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC position performs unexpectedly, GSR II 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 GSR II will offset losses from the drop in GSR II's long position.
The idea behind Coupang LLC and GSR II Meteora 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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