Correlation Between Tesla and Coupang LLC

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

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

Diversification Opportunities for Tesla and Coupang LLC

-0.47

Correlation Coefficient

Tesla  Coupang LLC

Very good diversification

The 3 months correlation between Tesla and Coupang is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Coupang LLC go up and down completely randomly.

Pair Corralation between Tesla and Coupang LLC

Given the investment horizon of 90 days Tesla Inc is expected to generate 2.05 times more return on investment than Coupang LLC. However, Tesla is 2.05 times more volatile than Coupang LLC. It trades about 0.24 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.01 per unit of risk. If you would invest  22,678  in Tesla Inc on September 15, 2024 and sell it today you would earn a total of  20,945  from holding Tesla Inc or generate 92.36% return on investment over 90 days.

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

Tesla Inc  vs.  Coupang LLC

Tesla Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained 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 Tesla and Coupang LLC

The main advantage of trading using opposite Tesla and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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 Tesla Inc 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.