Correlation Between Coupang LLC and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Coupang LLC and Summit Materials 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 Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coupang LLC and Summit Materials, you can compare the effects of market volatilities on Coupang LLC and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang LLC and Summit Materials.
Diversification Opportunities for Coupang LLC and Summit Materials
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coupang and Summit is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Coupang LLC i.e., Coupang LLC and Summit Materials go up and down completely randomly.
Pair Corralation between Coupang LLC and Summit Materials
Given the investment horizon of 90 days Coupang LLC is expected to generate 1.17 times more return on investment than Summit Materials. However, Coupang LLC is 1.17 times more volatile than Summit Materials. It trades about 0.08 of its potential returns per unit of risk. Summit Materials is currently generating about 0.09 per unit of risk. If you would invest 1,608 in Coupang LLC on August 24, 2024 and sell it today you would earn a total of 792.00 from holding Coupang LLC or generate 49.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coupang LLC vs. Summit Materials
Performance |
| Timeline |
| Coupang LLC |
| Summit Materials |
Coupang LLC and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coupang LLC and Summit Materials
The main advantage of trading using opposite Coupang LLC and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Coupang LLC vs. MercadoLibre | Coupang LLC vs. PDD Holdings | Coupang LLC vs. JD Inc Adr | Coupang LLC vs. Alibaba Group Holding |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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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