Correlation Between Luckin Coffee and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Thyssenkrupp 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 Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and thyssenkrupp AG, you can compare the effects of market volatilities on Luckin Coffee and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Thyssenkrupp.
Diversification Opportunities for Luckin Coffee and Thyssenkrupp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Luckin and Thyssenkrupp is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Luckin Coffee and Thyssenkrupp
Assuming the 90 days trading horizon Luckin Coffee is expected to under-perform the Thyssenkrupp. In addition to that, Luckin Coffee is 1.13 times more volatile than thyssenkrupp AG. It trades about -0.02 of its total potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.27 per unit of volatility. If you would invest 323.00 in thyssenkrupp AG on September 5, 2024 and sell it today you would earn a total of 68.00 from holding thyssenkrupp AG or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Luckin Coffee vs. thyssenkrupp AG
Performance |
| Timeline |
| Luckin Coffee |
| thyssenkrupp AG |
Luckin Coffee and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Thyssenkrupp
The main advantage of trading using opposite Luckin Coffee and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc | Luckin Coffee vs. Apple Inc |
| Thyssenkrupp vs. MELIA HOTELS | Thyssenkrupp vs. Luckin Coffee | Thyssenkrupp vs. ITALIAN WINE BRANDS | Thyssenkrupp vs. InterContinental Hotels Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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