Correlation Between China Reinsurance and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both China Reinsurance 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 China Reinsurance and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Reinsurance and Luckin Coffee, you can compare the effects of market volatilities on China Reinsurance 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 China Reinsurance with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Reinsurance and Luckin Coffee.
Diversification Opportunities for China Reinsurance and Luckin Coffee
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Luckin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding China Reinsurance and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and China Reinsurance 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 China Reinsurance 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 China Reinsurance i.e., China Reinsurance and Luckin Coffee go up and down completely randomly.
Pair Corralation between China Reinsurance and Luckin Coffee
Assuming the 90 days horizon China Reinsurance is expected to under-perform the Luckin Coffee. In addition to that, China Reinsurance is 3.16 times more volatile than Luckin Coffee. It trades about -0.04 of its total potential returns per unit of risk. Luckin Coffee is currently generating about 0.08 per unit of volatility. If you would invest 2,580 in Luckin Coffee on November 3, 2024 and sell it today you would earn a total of 80.00 from holding Luckin Coffee or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Reinsurance vs. Luckin Coffee
Performance |
| Timeline |
| China Reinsurance |
| Luckin Coffee |
China Reinsurance and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Reinsurance and Luckin Coffee
The main advantage of trading using opposite China Reinsurance and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Reinsurance 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.| China Reinsurance vs. MUENCHRUECKUNSADR 110 | China Reinsurance vs. Swiss Re AG | China Reinsurance vs. Reinsurance Group of | China Reinsurance vs. SCOR SE |
| Luckin Coffee vs. VIENNA INSURANCE GR | Luckin Coffee vs. Norwegian Air Shuttle | Luckin Coffee vs. Direct Line Insurance | Luckin Coffee vs. Delta Air Lines |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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