Correlation Between Coupang LLC and Worthington Steel

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

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

Diversification Opportunities for Coupang LLC and Worthington Steel

-0.24

Correlation Coefficient

Coupang LLC  Worthington Steel

Very good diversification

The 3 months correlation between Coupang and Worthington is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Coupang LLC i.e., Coupang LLC and Worthington Steel go up and down completely randomly.

Pair Corralation between Coupang LLC and Worthington Steel

Given the investment horizon of 90 days Coupang LLC is expected to under-perform the Worthington Steel. But the stock apears to be less risky and, when comparing its historical volatility, Coupang LLC is 1.47 times less risky than Worthington Steel. The stock trades about -0.08 of its potential returns per unit of risk. The Worthington Steel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,449  in Worthington Steel on September 23, 2024 and sell it today you would lose (39.00) from holding Worthington Steel or give up 1.13% of portfolio value over 90 days.

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

Coupang LLC  vs.  Worthington Steel

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 nearly stable basic indicators, Coupang LLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Worthington Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coupang LLC and Worthington Steel

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

The idea behind Coupang LLC and Worthington Steel 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .