Correlation Between PACIFIC and Coupang LLC

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

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

Diversification Opportunities for PACIFIC and Coupang LLC

0.12

Correlation Coefficient

PACIFIC  Coupang LLC

Average diversification

The 3 months correlation between PACIFIC and Coupang is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS ELECTRIC and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and PACIFIC 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 PACIFIC GAS ELECTRIC 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 PACIFIC i.e., PACIFIC and Coupang LLC go up and down completely randomly.

Pair Corralation between PACIFIC and Coupang LLC

Assuming the 90 days trading horizon PACIFIC GAS ELECTRIC is expected to under-perform the Coupang LLC. But the bond apears to be less risky and, when comparing its historical volatility, PACIFIC GAS ELECTRIC is 2.66 times less risky than Coupang LLC. The bond trades about -0.09 of its potential returns per unit of risk. The Coupang LLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,286  in Coupang LLC on December 24, 2024 and sell it today you would earn a total of  73.00  from holding Coupang LLC or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

PACIFIC GAS ELECTRIC  vs.  Coupang LLC

PACIFIC GAS ELECTRIC

Risk-Adjusted Performance

Very Weak

Over the last 90 days PACIFIC GAS ELECTRIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC 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

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 2 (%) 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 PACIFIC and Coupang LLC

The main advantage of trading using opposite PACIFIC and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC 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 PACIFIC GAS ELECTRIC 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.