Correlation Between Geely Automobile and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both Geely Automobile 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 Geely Automobile and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geely Automobile Holdings and Luckin Coffee, you can compare the effects of market volatilities on Geely Automobile 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 Geely Automobile with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geely Automobile and Luckin Coffee.
Diversification Opportunities for Geely Automobile and Luckin Coffee
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Geely and Luckin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Geely Automobile Holdings and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and Geely Automobile 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 Geely Automobile Holdings 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 Geely Automobile i.e., Geely Automobile and Luckin Coffee go up and down completely randomly.
Pair Corralation between Geely Automobile and Luckin Coffee
Assuming the 90 days horizon Geely Automobile Holdings is expected to under-perform the Luckin Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Geely Automobile Holdings is 2.8 times less risky than Luckin Coffee. The stock trades about -0.32 of its potential returns per unit of risk. The Luckin Coffee is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Luckin Coffee on October 14, 2024 and sell it today you would earn a total of 140.00 from holding Luckin Coffee or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geely Automobile Holdings vs. Luckin Coffee
Performance |
| Timeline |
| Geely Automobile Holdings |
| Luckin Coffee |
Geely Automobile and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geely Automobile and Luckin Coffee
The main advantage of trading using opposite Geely Automobile and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geely Automobile 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.| Geely Automobile vs. MOLSON RS BEVERAGE | Geely Automobile vs. Performance Food Group | Geely Automobile vs. United Natural Foods | Geely Automobile vs. Cal Maine Foods |
| Luckin Coffee vs. MOBILE FACTORY INC | Luckin Coffee vs. INTERSHOP Communications Aktiengesellschaft | Luckin Coffee vs. MidCap Financial Investment | Luckin Coffee vs. Geely Automobile Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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