Correlation Between Luckin Coffee and Tower One

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

By analyzing existing cross correlation between Luckin Coffee and Tower One Wireless, you can compare the effects of market volatilities on Luckin Coffee and Tower One 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 Tower One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Tower One.

Diversification Opportunities for Luckin Coffee and Tower One

0.0

Correlation Coefficient

Luckin Coffee  Tower One

Pay attention - limited upside

The 3 months correlation between Luckin and Tower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Tower One Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower One Wireless 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 Tower One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower One Wireless has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Tower One go up and down completely randomly.

Pair Corralation between Luckin Coffee and Tower One

If you would invest  2,280  in Luckin Coffee on October 9, 2024 and sell it today you would earn a total of  260.00  from holding Luckin Coffee or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Luckin Coffee  vs.  Tower One Wireless

Luckin Coffee

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 5 (%) 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.

Tower One Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Luckin Coffee and Tower One

The main advantage of trading using opposite Luckin Coffee and Tower One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Tower One 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 Tower One will offset losses from the drop in Tower One's long position.

The idea behind Luckin Coffee and Tower One Wireless 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..