Correlation Between LuxUrban Hotels and Coupang LLC

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

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Coupang LLC, you can compare the effects of market volatilities on LuxUrban Hotels and Coupang LLC 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 LuxUrban Hotels with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Coupang LLC.

Diversification Opportunities for LuxUrban Hotels and Coupang LLC

-0.48

Correlation Coefficient

LuxUrban Hotels  Coupang LLC

Very good diversification

The 3 months correlation between LuxUrban and Coupang is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and LuxUrban Hotels 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 LuxUrban Hotels 1300 are associated (or correlated) with Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of LuxUrban Hotels i.e., LuxUrban Hotels and Coupang LLC go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Coupang LLC

Assuming the 90 days horizon LuxUrban Hotels 1300 is expected to generate 1.37 times more return on investment than Coupang LLC. However, LuxUrban Hotels is 1.37 times more volatile than Coupang LLC. It trades about -0.06 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.23 per unit of risk. If you would invest  1,536  in LuxUrban Hotels 1300 on October 12, 2024 and sell it today you would lose (41.00) from holding LuxUrban Hotels 1300 or give up 2.67% of portfolio value over 90 days.

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

LuxUrban Hotels 1300  vs.  Coupang LLC

LuxUrban Hotels 1300

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LuxUrban Hotels 1300 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, LuxUrban Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with LuxUrban Hotels and Coupang LLC

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

The idea behind LuxUrban Hotels 1300 and Coupang LLC 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.