Correlation Between Coupang LLC and ATRenew

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

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

Diversification Opportunities for Coupang LLC and ATRenew

0.53

Correlation Coefficient

Coupang LLC  ATRenew

Very weak diversification

The 3 months correlation between Coupang and ATRenew is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Coupang LLC i.e., Coupang LLC and ATRenew go up and down completely randomly.

Pair Corralation between Coupang LLC and ATRenew

Given the investment horizon of 90 days Coupang LLC is expected to generate 0.46 times more return on investment than ATRenew. However, Coupang LLC is 2.19 times less risky than ATRenew. It trades about -0.04 of its potential returns per unit of risk. ATRenew Inc DRC is currently generating about -0.05 per unit of risk. If you would invest  2,536  in Coupang LLC on November 28, 2024 and sell it today you would lose (119.00) from holding Coupang LLC or give up 4.69% of portfolio value over 90 days.

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

Coupang LLC  vs.  ATRenew Inc DRC

Coupang LLC

Risk-Adjusted Performance

Very Weak

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

ATRenew Inc DRC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ATRenew Inc DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Coupang LLC and ATRenew

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

The idea behind Coupang LLC and ATRenew Inc DRC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.