Correlation Between Apple and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Luckin Coffee, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Luckin Coffee.
Diversification Opportunities for Apple and Luckin Coffee
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Luckin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and Apple 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 Apple Inc 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 Apple i.e., Apple and Luckin Coffee go up and down completely randomly.
Pair Corralation between Apple and Luckin Coffee
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.25 times more return on investment than Luckin Coffee. However, Apple Inc is 4.02 times less risky than Luckin Coffee. It trades about 0.06 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.01 per unit of risk. If you would invest 21,579 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 331.00 from holding Apple Inc or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Luckin Coffee
Performance |
| Timeline |
| Apple Inc |
| Luckin Coffee |
Apple and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Luckin Coffee
The main advantage of trading using opposite Apple and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Penn National Gaming | Apple vs. Fast Retailing Co | Apple vs. Hochschild Mining plc | Apple vs. AUTO TRADER ADR |
| Luckin Coffee vs. HEMISPHERE EGY | Luckin Coffee vs. Ubisoft Entertainment SA | Luckin Coffee vs. Tencent Music Entertainment | Luckin Coffee vs. Beijing Media |
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.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |