Correlation Between Luckin Coffee and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Aluminumof China 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 Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Aluminum of, you can compare the effects of market volatilities on Luckin Coffee and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Aluminumof China.
Diversification Opportunities for Luckin Coffee and Aluminumof China
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Luckin and Aluminumof is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Aluminumof China go up and down completely randomly.
Pair Corralation between Luckin Coffee and Aluminumof China
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.09 times more return on investment than Aluminumof China. However, Luckin Coffee is 1.09 times more volatile than Aluminum of. It trades about 0.11 of its potential returns per unit of risk. Aluminum of is currently generating about 0.11 per unit of risk. If you would invest 1,710 in Luckin Coffee on November 3, 2024 and sell it today you would earn a total of 950.00 from holding Luckin Coffee or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. Aluminum of
Performance |
| Timeline |
| Luckin Coffee |
| Aluminumof China |
Luckin Coffee and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Aluminumof China
The main advantage of trading using opposite Luckin Coffee and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| Luckin Coffee vs. VIENNA INSURANCE GR | Luckin Coffee vs. Norwegian Air Shuttle | Luckin Coffee vs. Direct Line Insurance | Luckin Coffee vs. Delta Air Lines |
| Aluminumof China vs. The Yokohama Rubber | Aluminumof China vs. Siamgas And Petrochemicals | Aluminumof China vs. Reinsurance Group of | Aluminumof China vs. VIENNA INSURANCE GR |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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