Correlation Between Coupang LLC and Summit Midstream

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

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

Diversification Opportunities for Coupang LLC and Summit Midstream

-0.59

Correlation Coefficient

Coupang LLC  Summit Midstream

Excellent diversification

The 3 months correlation between Coupang and Summit is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Coupang LLC i.e., Coupang LLC and Summit Midstream go up and down completely randomly.

Pair Corralation between Coupang LLC and Summit Midstream

Given the investment horizon of 90 days Coupang LLC is expected to under-perform the Summit Midstream. In addition to that, Coupang LLC is 1.26 times more volatile than Summit Midstream. It trades about -0.1 of its total potential returns per unit of risk. Summit Midstream is currently generating about 0.19 per unit of volatility. If you would invest  3,500  in Summit Midstream on October 27, 2024 and sell it today you would earn a total of  788.00  from holding Summit Midstream or generate 22.51% return on investment over 90 days.

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

Coupang LLC  vs.  Summit Midstream

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Summit Midstream

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Summit Midstream exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coupang LLC and Summit Midstream

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

The idea behind Coupang LLC and Summit Midstream 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.