Correlation Between Luckin Coffee and MEDTECH GLOBAL

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

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

Diversification Opportunities for Luckin Coffee and MEDTECH GLOBAL

0.0

Correlation Coefficient

Luckin Coffee  MEDTECH GLOBAL

Pay attention - limited upside

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

Pair Corralation between Luckin Coffee and MEDTECH GLOBAL

If you would invest  2,180  in Luckin Coffee on October 24, 2024 and sell it today you would earn a total of  360.00  from holding Luckin Coffee or generate 16.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Luckin Coffee  vs.  MEDTECH GLOBAL

Luckin Coffee

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Luckin Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

MEDTECH GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDTECH GLOBAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, MEDTECH GLOBAL is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Luckin Coffee and MEDTECH GLOBAL

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

The idea behind Luckin Coffee and MEDTECH GLOBAL 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.