Correlation Between BBB Foods and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Coupang LLC, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Coupang LLC.
Diversification Opportunities for BBB Foods and Coupang LLC
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBB and Coupang is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and Coupang LLC go up and down completely randomly.
Pair Corralation between BBB Foods and Coupang LLC
Given the investment horizon of 90 days BBB Foods is expected to generate 0.49 times more return on investment than Coupang LLC. However, BBB Foods is 2.03 times less risky than Coupang LLC. It trades about 0.0 of its potential returns per unit of risk. Coupang LLC is currently generating about -0.03 per unit of risk. If you would invest 3,422 in BBB Foods on August 28, 2024 and sell it today you would lose (6.00) from holding BBB Foods or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Coupang LLC
Performance |
| Timeline |
| BBB Foods |
| Coupang LLC |
BBB Foods and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Coupang LLC
The main advantage of trading using opposite BBB Foods and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. Innovative Food Hldg | BBB Foods vs. Calavo Growers | BBB Foods vs. The Chefs Warehouse | BBB Foods vs. AMCON Distributing |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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