Correlation Between GLG LIFE and Luckin Coffee

Can any of the company-specific risk be diversified away by investing in both GLG LIFE 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 GLG LIFE and Luckin Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLG LIFE TECH and Luckin Coffee, you can compare the effects of market volatilities on GLG LIFE 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 GLG LIFE with a short position of Luckin Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and Luckin Coffee.

Diversification Opportunities for GLG LIFE and Luckin Coffee

0.0

Correlation Coefficient

GLG LIFE  Luckin Coffee

Pay attention - limited upside

The 3 months correlation between GLG and Luckin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and GLG LIFE 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 GLG LIFE TECH 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 GLG LIFE i.e., GLG LIFE and Luckin Coffee go up and down completely randomly.

Pair Corralation between GLG LIFE and Luckin Coffee

If you would invest  2,240  in Luckin Coffee on December 23, 2024 and sell it today you would earn a total of  780.00  from holding Luckin Coffee or generate 34.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

GLG LIFE TECH  vs.  Luckin Coffee

GLG LIFE TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Luckin Coffee

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Luckin Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GLG LIFE and Luckin Coffee

The main advantage of trading using opposite GLG LIFE and Luckin Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE 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.

The idea behind GLG LIFE TECH and Luckin Coffee pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.