Correlation Between Naked Wines and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both Naked Wines 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 Naked Wines and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and Coupang LLC, you can compare the effects of market volatilities on Naked Wines 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 Naked Wines with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Coupang LLC.
Diversification Opportunities for Naked Wines and Coupang LLC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Naked and Coupang is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Naked Wines 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 Naked Wines plc 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 Naked Wines i.e., Naked Wines and Coupang LLC go up and down completely randomly.
Pair Corralation between Naked Wines and Coupang LLC
Assuming the 90 days horizon Naked Wines plc is expected to generate 4.76 times more return on investment than Coupang LLC. However, Naked Wines is 4.76 times more volatile than Coupang LLC. It trades about 0.25 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.25 per unit of risk. If you would invest 198.00 in Naked Wines plc on November 27, 2024 and sell it today you would earn a total of 82.00 from holding Naked Wines plc or generate 41.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. Coupang LLC
Performance |
| Timeline |
| Naked Wines plc |
| Coupang LLC |
Naked Wines and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Coupang LLC
The main advantage of trading using opposite Naked Wines and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines 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.| Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Naked Wines plc | Naked Wines vs. Crimson Wine | Naked Wines vs. Brown Forman |
| Coupang LLC vs. MercadoLibre | Coupang LLC vs. PDD Holdings | Coupang LLC vs. JD Inc Adr | Coupang LLC vs. Alibaba Group Holding |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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