Correlation Between Crown and Coupang LLC

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

By analyzing existing cross correlation between Crown Cork 7375 and Coupang LLC, you can compare the effects of market volatilities on Crown 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 Crown with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown and Coupang LLC.

Diversification Opportunities for Crown and Coupang LLC

0.54

Correlation Coefficient

Crown  Coupang LLC

Very weak diversification

The 3 months correlation between Crown and Coupang is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Crown Cork 7375 and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Crown 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 Crown Cork 7375 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 Crown i.e., Crown and Coupang LLC go up and down completely randomly.

Pair Corralation between Crown and Coupang LLC

Assuming the 90 days trading horizon Crown Cork 7375 is expected to generate 0.24 times more return on investment than Coupang LLC. However, Crown Cork 7375 is 4.12 times less risky than Coupang LLC. It trades about -0.02 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.07 per unit of risk. If you would invest  10,388  in Crown Cork 7375 on October 7, 2024 and sell it today you would lose (50.00) from holding Crown Cork 7375 or give up 0.48% of portfolio value over 90 days.

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

Crown Cork 7375  vs.  Coupang LLC

Crown Cork 7375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Cork 7375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crown is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Crown and Coupang LLC

The main advantage of trading using opposite Crown and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown 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 Crown Cork 7375 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.