Correlation Between Luckin Coffee and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and STMICROELECTRONICS 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 STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and STMICROELECTRONICS, you can compare the effects of market volatilities on Luckin Coffee and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and STMICROELECTRONICS.
Diversification Opportunities for Luckin Coffee and STMICROELECTRONICS
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luckin and STMICROELECTRONICS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Luckin Coffee and STMICROELECTRONICS
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.39 times less return on investment than STMICROELECTRONICS. But when comparing it to its historical volatility, Luckin Coffee is 1.17 times less risky than STMICROELECTRONICS. It trades about 0.16 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,380 in STMICROELECTRONICS on November 27, 2024 and sell it today you would earn a total of 284.00 from holding STMICROELECTRONICS or generate 11.93% 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. STMICROELECTRONICS
Performance |
| Timeline |
| Luckin Coffee |
| STMICROELECTRONICS |
Luckin Coffee and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and STMICROELECTRONICS
The main advantage of trading using opposite Luckin Coffee and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Luckin Coffee vs. Uber Technologies | Luckin Coffee vs. Genscript Biotech | Luckin Coffee vs. SOFI TECHNOLOGIES | Luckin Coffee vs. Easy Software AG |
| STMICROELECTRONICS vs. DETALION GAMES SA | STMICROELECTRONICS vs. Platinum Investment Management | STMICROELECTRONICS vs. AGNC Investment Corp | STMICROELECTRONICS vs. CONTAGIOUS GAMING 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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