Correlation Between GEAR4MUSIC and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC 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 GEAR4MUSIC and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and Luckin Coffee, you can compare the effects of market volatilities on GEAR4MUSIC 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 GEAR4MUSIC with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and Luckin Coffee.
Diversification Opportunities for GEAR4MUSIC and Luckin Coffee
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GEAR4MUSIC and Luckin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC i.e., GEAR4MUSIC and Luckin Coffee go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and Luckin Coffee
Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to generate 0.75 times more return on investment than Luckin Coffee. However, GEAR4MUSIC LS 10 is 1.33 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 0.02 per unit of risk. If you would invest 114.00 in GEAR4MUSIC LS 10 on September 1, 2024 and sell it today you would earn a total of 81.00 from holding GEAR4MUSIC LS 10 or generate 71.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. Luckin Coffee
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| Luckin Coffee |
GEAR4MUSIC and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and Luckin Coffee
The main advantage of trading using opposite GEAR4MUSIC and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC 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.| GEAR4MUSIC vs. Virtus Investment Partners | GEAR4MUSIC vs. Shenandoah Telecommunications | GEAR4MUSIC vs. ECHO INVESTMENT ZY | GEAR4MUSIC vs. Charter Communications |
| Luckin Coffee vs. United Natural Foods | Luckin Coffee vs. TreeHouse Foods | Luckin Coffee vs. WILLIS LEASE FIN | Luckin Coffee vs. Sixt Leasing SE |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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