Correlation Between Luckin Coffee and Larsen Toubro
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Larsen Toubro 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 Larsen Toubro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Larsen Toubro Limited, you can compare the effects of market volatilities on Luckin Coffee and Larsen Toubro 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 Larsen Toubro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Larsen Toubro.
Diversification Opportunities for Luckin Coffee and Larsen Toubro
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Luckin and Larsen is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Larsen Toubro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larsen Toubro Limited 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 Larsen Toubro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Larsen Toubro Limited has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Larsen Toubro go up and down completely randomly.
Pair Corralation between Luckin Coffee and Larsen Toubro
Assuming the 90 days trading horizon Luckin Coffee is expected to under-perform the Larsen Toubro. In addition to that, Luckin Coffee is 1.63 times more volatile than Larsen Toubro Limited. It trades about -0.21 of its total potential returns per unit of risk. Larsen Toubro Limited is currently generating about 0.07 per unit of volatility. If you would invest 3,920 in Larsen Toubro Limited on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Larsen Toubro Limited or generate 3.57% 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. Larsen Toubro Limited
Performance |
| Timeline |
| Luckin Coffee |
| Larsen Toubro Limited |
Luckin Coffee and Larsen Toubro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Larsen Toubro
The main advantage of trading using opposite Luckin Coffee and Larsen Toubro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Larsen Toubro 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 Larsen Toubro will offset losses from the drop in Larsen Toubro's long position.| Luckin Coffee vs. United Natural Foods | Luckin Coffee vs. TreeHouse Foods | Luckin Coffee vs. WILLIS LEASE FIN | Luckin Coffee vs. Sixt Leasing SE |
| Larsen Toubro vs. Highlight Communications AG | Larsen Toubro vs. BJs Restaurants | Larsen Toubro vs. Luckin Coffee | Larsen Toubro vs. GREENX METALS LTD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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