Correlation Between Pinterest and Coupang LLC

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

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

Diversification Opportunities for Pinterest and Coupang LLC

0.8

Correlation Coefficient

Pinterest  Coupang LLC

Very poor diversification

The 3 months correlation between Pinterest and Coupang is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and Coupang LLC go up and down completely randomly.

Pair Corralation between Pinterest and Coupang LLC

Given the investment horizon of 90 days Pinterest is expected to generate 1.77 times more return on investment than Coupang LLC. However, Pinterest is 1.77 times more volatile than Coupang LLC. It trades about 0.05 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.02 per unit of risk. If you would invest  2,915  in Pinterest on December 30, 2024 and sell it today you would earn a total of  232.00  from holding Pinterest or generate 7.96% return on investment over 90 days.

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

Pinterest  vs.  Coupang LLC

Pinterest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Coupang LLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Pinterest and Coupang LLC

The main advantage of trading using opposite Pinterest and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.