Correlation Between Luckin Coffee and SBA Communications
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and SBA Communications 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 SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and SBA Communications Corp, you can compare the effects of market volatilities on Luckin Coffee and SBA Communications 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 SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and SBA Communications.
Diversification Opportunities for Luckin Coffee and SBA Communications
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Luckin and SBA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and SBA Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBA Communications Corp 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 SBA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBA Communications Corp has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and SBA Communications go up and down completely randomly.
Pair Corralation between Luckin Coffee and SBA Communications
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 2.52 times more return on investment than SBA Communications. However, Luckin Coffee is 2.52 times more volatile than SBA Communications Corp. It trades about 0.02 of its potential returns per unit of risk. SBA Communications Corp is currently generating about -0.02 per unit of risk. If you would invest 2,166 in Luckin Coffee on September 3, 2024 and sell it today you would lose (146.00) from holding Luckin Coffee or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. SBA Communications Corp
Performance |
| Timeline |
| Luckin Coffee |
| SBA Communications Corp |
Luckin Coffee and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and SBA Communications
The main advantage of trading using opposite Luckin Coffee and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, SBA Communications 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 SBA Communications will offset losses from the drop in SBA Communications' long position.| Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc |
| SBA Communications vs. Luckin Coffee | SBA Communications vs. REVO INSURANCE SPA | SBA Communications vs. Selective Insurance Group | SBA Communications vs. Goosehead Insurance |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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