Correlation Between Veolia Environnement and Luckin Coffee
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement 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 Veolia Environnement and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veolia Environnement SA and Luckin Coffee, you can compare the effects of market volatilities on Veolia Environnement 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 Veolia Environnement with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Luckin Coffee.
Diversification Opportunities for Veolia Environnement and Luckin Coffee
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Veolia and Luckin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and Veolia Environnement 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 Veolia Environnement SA 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 Veolia Environnement i.e., Veolia Environnement and Luckin Coffee go up and down completely randomly.
Pair Corralation between Veolia Environnement and Luckin Coffee
Assuming the 90 days trading horizon Veolia Environnement SA is expected to under-perform the Luckin Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement SA is 1.63 times less risky than Luckin Coffee. The stock trades about -0.02 of its potential returns per unit of risk. The Luckin Coffee is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,480 in Luckin Coffee on November 8, 2024 and sell it today you would earn a total of 280.00 from holding Luckin Coffee or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement SA vs. Luckin Coffee
Performance |
| Timeline |
| Veolia Environnement |
| Luckin Coffee |
Veolia Environnement and Luckin Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Luckin Coffee
The main advantage of trading using opposite Veolia Environnement and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement 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.| Veolia Environnement vs. Transport International Holdings | Veolia Environnement vs. OURGAME INTHOLDL 00005 | Veolia Environnement vs. PENN NATL GAMING | Veolia Environnement vs. Scientific Games |
| Luckin Coffee vs. ANTA SPORTS PRODUCT | Luckin Coffee vs. PROSIEBENSAT1 MEDIADR4 | Luckin Coffee vs. Algonquin Power Utilities | Luckin Coffee vs. Tencent Music Entertainment |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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