Correlation Between Luckin Coffee and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Avanos Medical 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 Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Avanos Medical, you can compare the effects of market volatilities on Luckin Coffee and Avanos Medical 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 Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Avanos Medical.
Diversification Opportunities for Luckin Coffee and Avanos Medical
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luckin and Avanos is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Avanos Medical go up and down completely randomly.
Pair Corralation between Luckin Coffee and Avanos Medical
Assuming the 90 days trading horizon Luckin Coffee is expected to under-perform the Avanos Medical. But the stock apears to be less risky and, when comparing its historical volatility, Luckin Coffee is 1.09 times less risky than Avanos Medical. The stock trades about -0.16 of its potential returns per unit of risk. The Avanos Medical is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 2,060 in Avanos Medical on August 31, 2024 and sell it today you would lose (270.00) from holding Avanos Medical or give up 13.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Luckin Coffee vs. Avanos Medical
Performance |
| Timeline |
| Luckin Coffee |
| Avanos Medical |
Luckin Coffee and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Avanos Medical
The main advantage of trading using opposite Luckin Coffee and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| Luckin Coffee vs. Avanos Medical | Luckin Coffee vs. Japan Medical Dynamic | Luckin Coffee vs. Jacquet Metal Service | Luckin Coffee vs. EIDESVIK OFFSHORE NK |
| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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