Correlation Between Sun Country and Coupang LLC

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

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

Diversification Opportunities for Sun Country and Coupang LLC

-0.15

Correlation Coefficient

Sun Country  Coupang LLC

Good diversification

The 3 months correlation between Sun and Coupang is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and Coupang LLC go up and down completely randomly.

Pair Corralation between Sun Country and Coupang LLC

Given the investment horizon of 90 days Sun Country Airlines is expected to generate 1.62 times more return on investment than Coupang LLC. However, Sun Country is 1.62 times more volatile than Coupang LLC. It trades about 0.1 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.07 per unit of risk. If you would invest  1,028  in Sun Country Airlines on September 16, 2024 and sell it today you would earn a total of  466.00  from holding Sun Country Airlines or generate 45.33% return on investment over 90 days.

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

Sun Country Airlines  vs.  Coupang LLC

Sun Country Airlines

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sun Country showed 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 nearly stable basic indicators, Coupang LLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sun Country and Coupang LLC

The main advantage of trading using opposite Sun Country and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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 Sun Country Airlines 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 Transaction History module to view history of all your transactions and understand their impact on performance.