Correlation Between Luckin Coffee and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Hisense Home 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 Hisense Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Hisense Home Appliances, you can compare the effects of market volatilities on Luckin Coffee and Hisense Home 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 Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Hisense Home.
Diversification Opportunities for Luckin Coffee and Hisense Home
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luckin and Hisense is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Hisense Home go up and down completely randomly.
Pair Corralation between Luckin Coffee and Hisense Home
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.39 times more return on investment than Hisense Home. However, Luckin Coffee is 1.39 times more volatile than Hisense Home Appliances. It trades about 0.12 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about -0.03 per unit of risk. If you would invest 2,620 in Luckin Coffee on November 30, 2024 and sell it today you would earn a total of 180.00 from holding Luckin Coffee or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. Hisense Home Appliances
Performance |
| Timeline |
| Luckin Coffee |
| Hisense Home Appliances |
Luckin Coffee and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Hisense Home
The main advantage of trading using opposite Luckin Coffee and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.| Luckin Coffee vs. GALENA MINING LTD | ||
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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