Correlation Between Luckin Coffee and PC Connection
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and PC Connection 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 PC Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and PC Connection, you can compare the effects of market volatilities on Luckin Coffee and PC Connection 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 PC Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and PC Connection.
Diversification Opportunities for Luckin Coffee and PC Connection
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Luckin and PCC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection 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 PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and PC Connection go up and down completely randomly.
Pair Corralation between Luckin Coffee and PC Connection
Assuming the 90 days trading horizon Luckin Coffee is expected to under-perform the PC Connection. In addition to that, Luckin Coffee is 1.37 times more volatile than PC Connection. It trades about -0.21 of its total potential returns per unit of risk. PC Connection is currently generating about 0.13 per unit of volatility. If you would invest 6,191 in PC Connection on September 1, 2024 and sell it today you would earn a total of 509.00 from holding PC Connection or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Luckin Coffee vs. PC Connection
Performance |
| Timeline |
| Luckin Coffee |
| PC Connection |
Luckin Coffee and PC Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and PC Connection
The main advantage of trading using opposite Luckin Coffee and PC Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, PC Connection 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 PC Connection will offset losses from the drop in PC Connection'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 |
| PC Connection vs. Warner Music Group | PC Connection vs. United Rentals | PC Connection vs. Luckin Coffee | PC Connection vs. Air Lease |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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