Correlation Between Luckin Coffee and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and NXP Semiconductors 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 NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and NXP Semiconductors NV, you can compare the effects of market volatilities on Luckin Coffee and NXP Semiconductors 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 NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and NXP Semiconductors.
Diversification Opportunities for Luckin Coffee and NXP Semiconductors
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Luckin and NXP is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors 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 NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Luckin Coffee and NXP Semiconductors
Assuming the 90 days trading horizon Luckin Coffee is expected to generate 1.96 times more return on investment than NXP Semiconductors. However, Luckin Coffee is 1.96 times more volatile than NXP Semiconductors NV. It trades about 0.09 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.05 per unit of risk. If you would invest 2,120 in Luckin Coffee on October 26, 2024 and sell it today you would earn a total of 420.00 from holding Luckin Coffee or generate 19.81% 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. NXP Semiconductors NV
Performance |
| Timeline |
| Luckin Coffee |
| NXP Semiconductors |
Luckin Coffee and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luckin Coffee and NXP Semiconductors
The main advantage of trading using opposite Luckin Coffee and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Luckin Coffee vs. PLANT VEDA FOODS | Luckin Coffee vs. Tyson Foods | Luckin Coffee vs. Cal Maine Foods | Luckin Coffee vs. PROSIEBENSAT1 MEDIADR4 |
| NXP Semiconductors vs. Ryanair Holdings plc | NXP Semiconductors vs. Pentair plc | NXP Semiconductors vs. Media and Games | NXP Semiconductors vs. MOVIE GAMES SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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