Correlation Between ETFS Coffee and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Luckin Coffee 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 ETFS Coffee and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS Coffee ETC and Luckin Coffee, you can compare the effects of market volatilities on ETFS Coffee and Luckin Coffee 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 ETFS Coffee with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Luckin Coffee.
Diversification Opportunities for ETFS Coffee and Luckin Coffee
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETFS and Luckin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and ETFS 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 ETFS Coffee ETC are associated (or correlated) with Luckin Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luckin Coffee has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Luckin Coffee go up and down completely randomly.
Pair Corralation between ETFS Coffee and Luckin Coffee
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.63 times more return on investment than Luckin Coffee. However, ETFS Coffee ETC is 1.59 times less risky than Luckin Coffee. It trades about 0.22 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.12 per unit of risk. If you would invest 3,600 in ETFS Coffee ETC on November 2, 2024 and sell it today you would earn a total of 2,383 from holding ETFS Coffee ETC or generate 66.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.09% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Luckin Coffee
Performance |
| Timeline |
| ETFS Coffee ETC |
| Luckin Coffee |
ETFS Coffee and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Luckin Coffee
The main advantage of trading using opposite ETFS Coffee and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Luckin Coffee 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 Luckin Coffee will offset losses from the drop in Luckin Coffee's long position.| ETFS Coffee vs. QBE Insurance Group | ETFS Coffee vs. Molson Coors Beverage | ETFS Coffee vs. Urban Outfitters | ETFS Coffee vs. China Resources Beer |
| Luckin Coffee vs. Kingdee International Software | Luckin Coffee vs. Calibre Mining Corp | Luckin Coffee vs. BioNTech SE | Luckin Coffee vs. HELIOS TECHS 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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