Correlation Between Luckin Coffee and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Spirent 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 Spirent 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 Spirent Communications plc, you can compare the effects of market volatilities on Luckin Coffee and Spirent 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Spirent Communications.
Diversification Opportunities for Luckin Coffee and Spirent Communications
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Luckin and Spirent is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Spirent Communications go up and down completely randomly.
Pair Corralation between Luckin Coffee and Spirent Communications
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 3.62 times more return on investment than Spirent Communications. However, Luckin Coffee is 3.62 times more volatile than Spirent Communications plc. It trades about 0.06 of its potential returns per unit of risk. Spirent Communications plc is currently generating about -0.03 per unit of risk. If you would invest 1,690 in Luckin Coffee on September 3, 2024 and sell it today you would earn a total of 350.00 from holding Luckin Coffee or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. Spirent Communications plc
Performance |
| Timeline |
| Luckin Coffee |
| Spirent Communications |
Luckin Coffee and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Spirent Communications
The main advantage of trading using opposite Luckin Coffee and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Spirent 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc |
| Spirent Communications vs. Addus HomeCare | Spirent Communications vs. United Rentals | Spirent Communications vs. Hyster Yale Materials Handling | Spirent Communications vs. Corporate Office Properties |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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