Correlation Between Luckin Coffee and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and China BlueChemical 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 China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and China BlueChemical, you can compare the effects of market volatilities on Luckin Coffee and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and China BlueChemical.
Diversification Opportunities for Luckin Coffee and China BlueChemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luckin and China is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and China BlueChemical go up and down completely randomly.
Pair Corralation between Luckin Coffee and China BlueChemical
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.94 times less return on investment than China BlueChemical. In addition to that, Luckin Coffee is 1.35 times more volatile than China BlueChemical. It trades about 0.02 of its total potential returns per unit of risk. China BlueChemical is currently generating about 0.04 per unit of volatility. If you would invest 25.00 in China BlueChemical on September 13, 2024 and sell it today you would earn a total of 1.00 from holding China BlueChemical or generate 4.0% 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. China BlueChemical
Performance |
| Timeline |
| Luckin Coffee |
| China BlueChemical |
Luckin Coffee and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and China BlueChemical
The main advantage of trading using opposite Luckin Coffee and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc |
| China BlueChemical vs. Superior Plus Corp | China BlueChemical vs. SIVERS SEMICONDUCTORS AB | China BlueChemical vs. NorAm Drilling AS | China BlueChemical vs. Norsk Hydro ASA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges |