Correlation Between UL Solutions and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both UL Solutions 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 UL Solutions and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UL Solutions and Coupang LLC, you can compare the effects of market volatilities on UL Solutions 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 UL Solutions with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UL Solutions and Coupang LLC.
Diversification Opportunities for UL Solutions and Coupang LLC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ULS and Coupang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding UL Solutions and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and UL Solutions 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 UL Solutions 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 UL Solutions i.e., UL Solutions and Coupang LLC go up and down completely randomly.
Pair Corralation between UL Solutions and Coupang LLC
Considering the 90-day investment horizon UL Solutions is expected to generate 2.45 times less return on investment than Coupang LLC. In addition to that, UL Solutions is 1.0 times more volatile than Coupang LLC. It trades about 0.08 of its total potential returns per unit of risk. Coupang LLC is currently generating about 0.18 per unit of volatility. If you would invest 2,270 in Coupang LLC on November 28, 2024 and sell it today you would earn a total of 147.00 from holding Coupang LLC or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UL Solutions vs. Coupang LLC
Performance |
| Timeline |
| UL Solutions |
| Coupang LLC |
UL Solutions and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UL Solutions and Coupang LLC
The main advantage of trading using opposite UL Solutions and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UL Solutions 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.| UL Solutions vs. Lindblad Expeditions Holdings | UL Solutions vs. Life Time Group | UL Solutions vs. Birks Group | UL Solutions vs. Aterian |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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