Correlation Between Luckin Coffee and National Grid
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and National Grid 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 National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and National Grid plc, you can compare the effects of market volatilities on Luckin Coffee and National Grid 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 National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and National Grid.
Diversification Opportunities for Luckin Coffee and National Grid
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luckin and National is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and National Grid plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid plc 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 National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid plc has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and National Grid go up and down completely randomly.
Pair Corralation between Luckin Coffee and National Grid
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.43 times more return on investment than National Grid. However, Luckin Coffee is 1.43 times more volatile than National Grid plc. It trades about 0.19 of its potential returns per unit of risk. National Grid plc is currently generating about 0.05 per unit of risk. If you would invest 2,280 in Luckin Coffee on October 25, 2024 and sell it today you would earn a total of 260.00 from holding Luckin Coffee or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luckin Coffee vs. National Grid plc
Performance |
| Timeline |
| Luckin Coffee |
| National Grid plc |
Luckin Coffee and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and National Grid
The main advantage of trading using opposite Luckin Coffee and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.| Luckin Coffee vs. Flutter Entertainment PLC | Luckin Coffee vs. Pembina Pipeline Corp | Luckin Coffee vs. Tencent Music Entertainment | Luckin Coffee vs. RCS MediaGroup SpA |
| National Grid vs. Commercial Vehicle Group | National Grid vs. SILICON LABORATOR | National Grid vs. INDO RAMA SYNTHETIC | National Grid vs. TRI CHEMICAL LABORATINC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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