Correlation Between Coupang LLC and Target Hospitality

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

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

Diversification Opportunities for Coupang LLC and Target Hospitality

-0.8

Correlation Coefficient

Coupang LLC  Target Hospitality

Pay attention - limited upside

The 3 months correlation between Coupang and Target is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp 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 Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of Coupang LLC i.e., Coupang LLC and Target Hospitality go up and down completely randomly.

Pair Corralation between Coupang LLC and Target Hospitality

Given the investment horizon of 90 days Coupang LLC is expected to generate 0.65 times more return on investment than Target Hospitality. However, Coupang LLC is 1.53 times less risky than Target Hospitality. It trades about 0.04 of its potential returns per unit of risk. Target Hospitality Corp is currently generating about 0.0 per unit of risk. If you would invest  1,651  in Coupang LLC on October 27, 2024 and sell it today you would earn a total of  549.00  from holding Coupang LLC or generate 33.25% return on investment over 90 days.

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

Coupang LLC  vs.  Target Hospitality Corp

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.

Target Hospitality Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Target Hospitality Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Target Hospitality demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coupang LLC and Target Hospitality

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

The idea behind Coupang LLC and Target Hospitality Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.