Correlation Between CN MODERN and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Luckin Coffee 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 CN MODERN and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Luckin Coffee, you can compare the effects of market volatilities on CN MODERN and Luckin Coffee 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 CN MODERN with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Luckin Coffee.
Diversification Opportunities for CN MODERN and Luckin Coffee
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 07M and Luckin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Luckin Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luckin Coffee has no effect on the direction of CN MODERN i.e., CN MODERN and Luckin Coffee go up and down completely randomly.
Pair Corralation between CN MODERN and Luckin Coffee
Assuming the 90 days trading horizon CN MODERN is expected to generate 4.96 times less return on investment than Luckin Coffee. In addition to that, CN MODERN is 1.47 times more volatile than Luckin Coffee. It trades about 0.02 of its total potential returns per unit of risk. Luckin Coffee is currently generating about 0.16 per unit of volatility. If you would invest 2,260 in Luckin Coffee on October 12, 2024 and sell it today you would earn a total of 220.00 from holding Luckin Coffee or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Luckin Coffee
Performance |
| Timeline |
| CN MODERN DAIRY |
| Luckin Coffee |
CN MODERN and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Luckin Coffee
The main advantage of trading using opposite CN MODERN and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Luckin Coffee 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 Luckin Coffee will offset losses from the drop in Luckin Coffee's long position.| CN MODERN vs. KIMBALL ELECTRONICS | CN MODERN vs. PKSHA TECHNOLOGY INC | CN MODERN vs. Agilent Technologies | CN MODERN vs. CARSALESCOM |
| Luckin Coffee vs. ADDUS HOMECARE | Luckin Coffee vs. CN MODERN DAIRY | Luckin Coffee vs. BORR DRILLING NEW | Luckin Coffee vs. CAIRN HOMES EO |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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