Correlation Between Disney and Coupang LLC

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Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Coupang LLC, you can compare the effects of market volatilities on Disney 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 Disney with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Coupang LLC.

Diversification Opportunities for Disney and Coupang LLC

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Disney and Coupang is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Disney 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 Walt Disney 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 Disney i.e., Disney and Coupang LLC go up and down completely randomly.

Pair Corralation between Disney and Coupang LLC

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Coupang LLC. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 1.53 times less risky than Coupang LLC. The stock trades about -0.08 of its potential returns per unit of risk. The Coupang LLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,773  in Coupang LLC on September 8, 2022 and sell it today you would earn a total of  27.00  from holding Coupang LLC or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Coupang LLC

 Performance (%) 
       Timeline  
Walt Disney 
Disney Performance
0 of 100
Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Disney Price Channel

Coupang LLC 
Coupang Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Coupang LLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Coupang Price Channel

Disney and Coupang LLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Coupang LLC

The main advantage of trading using opposite Disney and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.
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The idea behind Walt Disney 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.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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