Correlation Between Luckin Coffee and Advanced Micro

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

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

Diversification Opportunities for Luckin Coffee and Advanced Micro

0.49

Correlation Coefficient

Luckin Coffee  Advanced Micro

Very weak diversification

The 3 months correlation between Luckin and Advanced is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Advanced Micro go up and down completely randomly.

Pair Corralation between Luckin Coffee and Advanced Micro

Assuming the 90 days trading horizon Luckin Coffee is expected to generate 2.75 times less return on investment than Advanced Micro. In addition to that, Luckin Coffee is 1.22 times more volatile than Advanced Micro Devices. It trades about 0.1 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.34 per unit of volatility. If you would invest  7,537  in Advanced Micro Devices on April 20, 2025 and sell it today you would earn a total of  6,063  from holding Advanced Micro Devices or generate 80.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Luckin Coffee  vs.  Advanced Micro Devices

Luckin Coffee

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Luckin Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advanced Micro Devices

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advanced Micro reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Luckin Coffee and Advanced Micro

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

The idea behind Luckin Coffee and Advanced Micro Devices 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.