Correlation Between Luckin Coffee and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and INSURANCE AUST 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 INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and INSURANCE AUST GRP, you can compare the effects of market volatilities on Luckin Coffee and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and INSURANCE AUST.
Diversification Opportunities for Luckin Coffee and INSURANCE AUST
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luckin and INSURANCE is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Luckin Coffee and INSURANCE AUST
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 2.21 times more return on investment than INSURANCE AUST. However, Luckin Coffee is 2.21 times more volatile than INSURANCE AUST GRP. It trades about 0.04 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about -0.07 per unit of risk. If you would invest 2,820 in Luckin Coffee on January 25, 2025 and sell it today you would earn a total of 80.00 from holding Luckin Coffee or generate 2.84% 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. INSURANCE AUST GRP
Performance |
| Timeline |
| Luckin Coffee |
| INSURANCE AUST GRP |
Luckin Coffee and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and INSURANCE AUST
The main advantage of trading using opposite Luckin Coffee and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc |
| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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