Correlation Between FARM 51 and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and Luckin Coffee, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Luckin Coffee.
Diversification Opportunities for FARM 51 and Luckin Coffee
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FARM and Luckin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and Luckin Coffee go up and down completely randomly.
Pair Corralation between FARM 51 and Luckin Coffee
Assuming the 90 days horizon FARM 51 GROUP is expected to under-perform the Luckin Coffee. But the stock apears to be less risky and, when comparing its historical volatility, FARM 51 GROUP is 1.39 times less risky than Luckin Coffee. The stock trades about -0.03 of its potential returns per unit of risk. The Luckin Coffee is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,163 in Luckin Coffee on October 11, 2024 and sell it today you would earn a total of 317.00 from holding Luckin Coffee or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
FARM 51 GROUP vs. Luckin Coffee
Performance |
| Timeline |
| FARM 51 GROUP |
| Luckin Coffee |
FARM 51 and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and Luckin Coffee
The main advantage of trading using opposite FARM 51 and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. PKSHA TECHNOLOGY INC | FARM 51 vs. Warner Music Group | FARM 51 vs. BJs Restaurants | FARM 51 vs. ETFS Coffee ETC |
| Luckin Coffee vs. FARM 51 GROUP | Luckin Coffee vs. VARIOUS EATERIES LS | Luckin Coffee vs. Sterling Construction | Luckin Coffee vs. ETFS Coffee ETC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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