Correlation Between GMS and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both GMS 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 GMS and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Coupang LLC, you can compare the effects of market volatilities on GMS 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 GMS with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Coupang LLC.
Diversification Opportunities for GMS and Coupang LLC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMS and Coupang is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and GMS 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 GMS Inc 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 GMS i.e., GMS and Coupang LLC go up and down completely randomly.
Pair Corralation between GMS and Coupang LLC
Considering the 90-day investment horizon GMS is expected to generate 1.83 times less return on investment than Coupang LLC. But when comparing it to its historical volatility, GMS Inc is 1.24 times less risky than Coupang LLC. It trades about 0.05 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,364 in Coupang LLC on November 28, 2024 and sell it today you would earn a total of 1,176 from holding Coupang LLC or generate 86.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Coupang LLC
Performance |
| Timeline |
| GMS Inc |
| Coupang LLC |
GMS and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Coupang LLC
The main advantage of trading using opposite GMS and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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