Correlation Between Choice Hotels and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both Choice Hotels 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 Choice Hotels and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and Luckin Coffee, you can compare the effects of market volatilities on Choice Hotels 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 Choice Hotels with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Luckin Coffee.
Diversification Opportunities for Choice Hotels and Luckin Coffee
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Choice and Luckin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and Choice Hotels 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 Choice Hotels International 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 Choice Hotels i.e., Choice Hotels and Luckin Coffee go up and down completely randomly.
Pair Corralation between Choice Hotels and Luckin Coffee
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.78 times more return on investment than Luckin Coffee. However, Choice Hotels International is 1.29 times less risky than Luckin Coffee. It trades about 0.15 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.05 per unit of risk. If you would invest 13,500 in Choice Hotels International on November 1, 2024 and sell it today you would earn a total of 600.00 from holding Choice Hotels International or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Luckin Coffee
Performance |
| Timeline |
| Choice Hotels Intern |
| Luckin Coffee |
Choice Hotels and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Luckin Coffee
The main advantage of trading using opposite Choice Hotels and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels 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.| Choice Hotels vs. Corsair Gaming | Choice Hotels vs. DELTA AIR LINES | Choice Hotels vs. Delta Air Lines | Choice Hotels vs. SOGECLAIR SA INH |
| Luckin Coffee vs. Harmony Gold Mining | Luckin Coffee vs. US Physical Therapy | Luckin Coffee vs. MPH Health Care | Luckin Coffee vs. Jacquet Metal Service |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |