Correlation Between Sea and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both Sea 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 Sea and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Coupang LLC, you can compare the effects of market volatilities on Sea 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 Sea with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Coupang LLC.
Diversification Opportunities for Sea and Coupang LLC
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sea and Coupang is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Sea 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 Sea 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 Sea i.e., Sea and Coupang LLC go up and down completely randomly.
Pair Corralation between Sea and Coupang LLC
Allowing for the 90-day total investment horizon Sea is expected to generate 0.89 times more return on investment than Coupang LLC. However, Sea is 1.12 times less risky than Coupang LLC. It trades about 0.29 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.01 per unit of risk. If you would invest 9,599 in Sea on August 30, 2024 and sell it today you would earn a total of 1,972 from holding Sea or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. Coupang LLC
Performance |
| Timeline |
| Sea |
| Coupang LLC |
Sea and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Coupang LLC
The main advantage of trading using opposite Sea and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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.The idea behind Sea and Coupang LLC 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.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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