Correlation Between National Health and Coupang

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

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

Diversification Opportunities for National Health and Coupang

-0.44

Correlation Coefficient

National Health  Coupang

Very good diversification

The 3 months correlation between National and Coupang is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Coupang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang and National Health 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 National Health Investors are associated (or correlated) with Coupang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang has no effect on the direction of National Health i.e., National Health and Coupang go up and down completely randomly.

Pair Corralation between National Health and Coupang

Assuming the 90 days trading horizon National Health Investors is expected to under-perform the Coupang. But the stock apears to be less risky and, when comparing its historical volatility, National Health Investors is 1.11 times less risky than Coupang. The stock trades about -0.04 of its potential returns per unit of risk. The Coupang is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,176  in Coupang on September 13, 2024 and sell it today you would earn a total of  74.00  from holding Coupang or generate 3.4% return on investment over 90 days.

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

National Health Investors  vs.  Coupang

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Coupang

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coupang is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Health and Coupang

The main advantage of trading using opposite National Health and Coupang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Coupang 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 will offset losses from the drop in Coupang's long position.

The idea behind National Health Investors and Coupang 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.