Correlation Between Harmony Gold and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both Harmony Gold 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 Harmony Gold and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Luckin Coffee, you can compare the effects of market volatilities on Harmony Gold 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 Harmony Gold with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Luckin Coffee.
Diversification Opportunities for Harmony Gold and Luckin Coffee
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harmony and Luckin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and Harmony Gold 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 Harmony Gold Mining 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 Harmony Gold i.e., Harmony Gold and Luckin Coffee go up and down completely randomly.
Pair Corralation between Harmony Gold and Luckin Coffee
Assuming the 90 days horizon Harmony Gold is expected to generate 2.09 times less return on investment than Luckin Coffee. But when comparing it to its historical volatility, Harmony Gold Mining is 1.18 times less risky than Luckin Coffee. It trades about 0.07 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Luckin Coffee on November 2, 2024 and sell it today you would earn a total of 920.00 from holding Luckin Coffee or generate 51.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Luckin Coffee
Performance |
| Timeline |
| Harmony Gold Mining |
| Luckin Coffee |
Harmony Gold and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Luckin Coffee
The main advantage of trading using opposite Harmony Gold and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold 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.| Harmony Gold vs. Salesforce | Harmony Gold vs. Mitsubishi Materials | Harmony Gold vs. Applied Materials | Harmony Gold vs. Vulcan Materials |
| Luckin Coffee vs. Kingdee International Software | Luckin Coffee vs. Calibre Mining Corp | Luckin Coffee vs. BioNTech SE | Luckin Coffee vs. HELIOS TECHS INC |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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