Correlation Between Japan Medical and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both Japan Medical 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 Japan Medical and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and Luckin Coffee, you can compare the effects of market volatilities on Japan Medical 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 Japan Medical with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Luckin Coffee.
Diversification Opportunities for Japan Medical and Luckin Coffee
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Japan and Luckin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and Japan Medical 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 Japan Medical Dynamic 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 Japan Medical i.e., Japan Medical and Luckin Coffee go up and down completely randomly.
Pair Corralation between Japan Medical and Luckin Coffee
Assuming the 90 days horizon Japan Medical Dynamic is expected to under-perform the Luckin Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Japan Medical Dynamic is 2.97 times less risky than Luckin Coffee. The stock trades about -0.19 of its potential returns per unit of risk. The Luckin Coffee is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,770 in Luckin Coffee on September 2, 2024 and sell it today you would earn a total of 250.00 from holding Luckin Coffee or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Luckin Coffee
Performance |
| Timeline |
| Japan Medical Dynamic |
| Luckin Coffee |
Japan Medical and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Luckin Coffee
The main advantage of trading using opposite Japan Medical and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical 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.| Japan Medical vs. InterContinental Hotels Group | Japan Medical vs. MIRAMAR HOTEL INV | Japan Medical vs. GRIFFIN MINING LTD | Japan Medical vs. Host Hotels Resorts |
| Luckin Coffee vs. ALBIS LEASING AG | Luckin Coffee vs. NEWELL RUBBERMAID | Luckin Coffee vs. ETFS Coffee ETC | Luckin Coffee vs. Vulcan Materials |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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