Correlation Between Luckin Coffee and UDR

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

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

Diversification Opportunities for Luckin Coffee and UDR

0.15

Correlation Coefficient

Luckin Coffee  UDR

Average diversification

The 3 months correlation between Luckin and UDR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc 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 UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and UDR go up and down completely randomly.

Pair Corralation between Luckin Coffee and UDR

Assuming the 90 days trading horizon Luckin Coffee is expected to generate 2.63 times more return on investment than UDR. However, Luckin Coffee is 2.63 times more volatile than UDR Inc. It trades about 0.2 of its potential returns per unit of risk. UDR Inc is currently generating about 0.01 per unit of risk. If you would invest  2,280  in Luckin Coffee on December 29, 2024 and sell it today you would earn a total of  1,020  from holding Luckin Coffee or generate 44.74% return on investment over 90 days.

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

Luckin Coffee  vs.  UDR Inc

Luckin Coffee

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 15 (%) 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.

UDR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days UDR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UDR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Luckin Coffee and UDR

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

The idea behind Luckin Coffee and UDR Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.