Correlation Between Coupang LLC and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Coupang LLC and Lululemon Athletica 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 Coupang LLC and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coupang LLC and Lululemon Athletica, you can compare the effects of market volatilities on Coupang LLC and Lululemon Athletica 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 Coupang LLC with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang LLC and Lululemon Athletica.
Diversification Opportunities for Coupang LLC and Lululemon Athletica
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coupang and Lululemon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Coupang LLC 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 Coupang LLC are associated (or correlated) with Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Coupang LLC i.e., Coupang LLC and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Coupang LLC and Lululemon Athletica
Given the investment horizon of 90 days Coupang LLC is expected to generate 1.09 times more return on investment than Lululemon Athletica. However, Coupang LLC is 1.09 times more volatile than Lululemon Athletica. It trades about 0.04 of its potential returns per unit of risk. Lululemon Athletica is currently generating about -0.01 per unit of risk. If you would invest 1,791 in Coupang LLC on August 26, 2024 and sell it today you would earn a total of 641.00 from holding Coupang LLC or generate 35.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coupang LLC vs. Lululemon Athletica
Performance |
| Timeline |
| Coupang LLC |
| Lululemon Athletica |
Coupang LLC and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coupang LLC and Lululemon Athletica
The main advantage of trading using opposite Coupang LLC and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.| Coupang LLC vs. MercadoLibre | Coupang LLC vs. PDD Holdings | Coupang LLC vs. JD Inc Adr | Coupang LLC vs. Alibaba Group Holding |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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