Correlation Between Luckin Coffee and RELX PLC
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and RELX PLC 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 RELX PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and RELX PLC, you can compare the effects of market volatilities on Luckin Coffee and RELX PLC 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 RELX PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and RELX PLC.
Diversification Opportunities for Luckin Coffee and RELX PLC
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Luckin and RELX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and RELX PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELX 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 RELX PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELX PLC has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and RELX PLC go up and down completely randomly.
Pair Corralation between Luckin Coffee and RELX PLC
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 3.43 times more return on investment than RELX PLC. However, Luckin Coffee is 3.43 times more volatile than RELX PLC. It trades about 0.16 of its potential returns per unit of risk. RELX PLC is currently generating about 0.44 per unit of risk. If you would invest 2,240 in Luckin Coffee on October 23, 2024 and sell it today you would earn a total of 200.00 from holding Luckin Coffee or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Luckin Coffee vs. RELX PLC
Performance |
| Timeline |
| Luckin Coffee |
| RELX PLC |
Luckin Coffee and RELX PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and RELX PLC
The main advantage of trading using opposite Luckin Coffee and RELX PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, RELX PLC 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 RELX PLC will offset losses from the drop in RELX PLC's long position.| Luckin Coffee vs. Zoom Video Communications | Luckin Coffee vs. Citic Telecom International | Luckin Coffee vs. ELMOS SEMICONDUCTOR | Luckin Coffee vs. TOREX SEMICONDUCTOR LTD |
| RELX PLC vs. Relx PLC ADR | RELX PLC vs. Wolters Kluwer NV | RELX PLC vs. WOLTERS KLUWER ADR | RELX PLC vs. Informa PLC |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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