Correlation Between Luckin Coffee and Take Two
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Take Two 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 Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Take Two Interactive Software, you can compare the effects of market volatilities on Luckin Coffee and Take Two 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 Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Take Two.
Diversification Opportunities for Luckin Coffee and Take Two
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luckin and Take is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Take Two go up and down completely randomly.
Pair Corralation between Luckin Coffee and Take Two
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.72 times less return on investment than Take Two. In addition to that, Luckin Coffee is 2.35 times more volatile than Take Two Interactive Software. It trades about 0.02 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.07 per unit of volatility. If you would invest 9,866 in Take Two Interactive Software on October 27, 2024 and sell it today you would earn a total of 7,656 from holding Take Two Interactive Software or generate 77.6% 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. Take Two Interactive Software
Performance |
| Timeline |
| Luckin Coffee |
| Take Two Interactive |
Luckin Coffee and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and Take Two
The main advantage of trading using opposite Luckin Coffee and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Take Two 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 Take Two will offset losses from the drop in Take Two's long position.| Luckin Coffee vs. Telecom Argentina SA | Luckin Coffee vs. EEDUCATION ALBERT AB | Luckin Coffee vs. SK TELECOM TDADR | Luckin Coffee vs. EMBARK EDUCATION LTD |
| Take Two vs. Tower One Wireless | Take Two vs. QBE Insurance Group | Take Two vs. United Insurance Holdings | Take Two vs. CITY OFFICE REIT |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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