Correlation Between SBM OFFSHORE and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE 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 SBM OFFSHORE and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Luckin Coffee, you can compare the effects of market volatilities on SBM OFFSHORE 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 SBM OFFSHORE with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Luckin Coffee.
Diversification Opportunities for SBM OFFSHORE and Luckin Coffee
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Luckin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE i.e., SBM OFFSHORE and Luckin Coffee go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Luckin Coffee
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.38 times more return on investment than Luckin Coffee. However, SBM OFFSHORE is 2.63 times less risky than Luckin Coffee. It trades about 0.09 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.0 per unit of risk. If you would invest 1,159 in SBM OFFSHORE on September 14, 2024 and sell it today you would earn a total of 507.00 from holding SBM OFFSHORE or generate 43.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
SBM OFFSHORE vs. Luckin Coffee
Performance |
| Timeline |
| SBM OFFSHORE |
| Luckin Coffee |
SBM OFFSHORE and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Luckin Coffee
The main advantage of trading using opposite SBM OFFSHORE and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE 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.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
| Luckin Coffee vs. Datang International Power | Luckin Coffee vs. Molson Coors Beverage | Luckin Coffee vs. Fevertree Drinks PLC | Luckin Coffee vs. DICKER DATA LTD |
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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