Correlation Between Luckin Coffee and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Guidewire Software 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 Luckin Coffee and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Guidewire Software, you can compare the effects of market volatilities on Luckin Coffee and Guidewire Software 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 Luckin Coffee with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Guidewire Software.
Diversification Opportunities for Luckin Coffee and Guidewire Software
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luckin and Guidewire is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and Luckin Coffee 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 Luckin Coffee are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Guidewire Software go up and down completely randomly.
Pair Corralation between Luckin Coffee and Guidewire Software
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 2.65 times more return on investment than Guidewire Software. However, Luckin Coffee is 2.65 times more volatile than Guidewire Software. It trades about 0.13 of its potential returns per unit of risk. Guidewire Software is currently generating about 0.08 per unit of risk. If you would invest 2,300 in Luckin Coffee on October 11, 2024 and sell it today you would earn a total of 180.00 from holding Luckin Coffee or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Luckin Coffee vs. Guidewire Software
Performance |
| Timeline |
| Luckin Coffee |
| Guidewire Software |
Luckin Coffee and Guidewire Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Guidewire Software
The main advantage of trading using opposite Luckin Coffee and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.| Luckin Coffee vs. FARM 51 GROUP | Luckin Coffee vs. VARIOUS EATERIES LS | Luckin Coffee vs. Sterling Construction | Luckin Coffee vs. ETFS Coffee ETC |
| Guidewire Software vs. G8 EDUCATION | Guidewire Software vs. Luckin Coffee | Guidewire Software vs. Xinhua Winshare Publishing | Guidewire Software vs. GEAR4MUSIC LS 10 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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