Correlation Between NEL ASA and Coupang

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

By analyzing existing cross correlation between NEL ASA ADR30 and Coupang, you can compare the effects of market volatilities on NEL ASA and Coupang 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 NEL ASA with a short position of Coupang. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and Coupang.

Diversification Opportunities for NEL ASA and Coupang

0.05

Correlation Coefficient

NEL ASA  Coupang

Significant diversification

The 3 months correlation between NEL and Coupang is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and Coupang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang and NEL ASA 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 NEL ASA ADR30 are associated (or correlated) with Coupang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang has no effect on the direction of NEL ASA i.e., NEL ASA and Coupang go up and down completely randomly.

Pair Corralation between NEL ASA and Coupang

Assuming the 90 days trading horizon NEL ASA is expected to generate 18.19 times less return on investment than Coupang. In addition to that, NEL ASA is 1.53 times more volatile than Coupang. It trades about 0.0 of its total potential returns per unit of risk. Coupang is currently generating about 0.13 per unit of volatility. If you would invest  2,263  in Coupang on December 1, 2024 and sell it today you would earn a total of  137.00  from holding Coupang or generate 6.05% return on investment over 90 days.

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

NEL ASA ADR30  vs.  Coupang

NEL ASA ADR30

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEL ASA ADR30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Coupang

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NEL ASA and Coupang

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

The idea behind NEL ASA ADR30 and Coupang 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.