Correlation Between Coupang LLC and 00108WAJ9

Can any of the company-specific risk be diversified away by investing in both Coupang LLC and 00108WAJ9 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 00108WAJ9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coupang LLC and AEP Texas 415, you can compare the effects of market volatilities on Coupang LLC and 00108WAJ9 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 00108WAJ9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang LLC and 00108WAJ9.

Diversification Opportunities for Coupang LLC and 00108WAJ9

0.62

Correlation Coefficient

Coupang LLC  00108WAJ9

Poor diversification

The 3 months correlation between Coupang and 00108WAJ9 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and AEP Texas 415 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP Texas 415 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 00108WAJ9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP Texas 415 has no effect on the direction of Coupang LLC i.e., Coupang LLC and 00108WAJ9 go up and down completely randomly.

Pair Corralation between Coupang LLC and 00108WAJ9

Given the investment horizon of 90 days Coupang LLC is expected to under-perform the 00108WAJ9. But the stock apears to be less risky and, when comparing its historical volatility, Coupang LLC is 2.29 times less risky than 00108WAJ9. The stock trades about -0.12 of its potential returns per unit of risk. The AEP Texas 415 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7,832  in AEP Texas 415 on October 25, 2024 and sell it today you would earn a total of  624.00  from holding AEP Texas 415 or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.42%
Values	Daily Returns

Coupang LLC  vs.  AEP Texas 415

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 inconsistent 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.

AEP Texas 415

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP Texas 415 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAJ9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coupang LLC and 00108WAJ9

The main advantage of trading using opposite Coupang LLC and 00108WAJ9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC position performs unexpectedly, 00108WAJ9 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 00108WAJ9 will offset losses from the drop in 00108WAJ9's long position.

The idea behind Coupang LLC and AEP Texas 415 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..