Correlation Between Luckin Coffee and Keck Seng

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Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and Keck Seng 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 Keck Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luckin Coffee and Keck Seng Investments, you can compare the effects of market volatilities on Luckin Coffee and Keck Seng 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 Keck Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and Keck Seng.

Diversification Opportunities for Luckin Coffee and Keck Seng

LuckinKeckDiversified AwayLuckinKeckDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Luckin and Keck is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and Keck Seng Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Investments 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 Keck Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keck Seng Investments has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and Keck Seng go up and down completely randomly.

Pair Corralation between Luckin Coffee and Keck Seng

Assuming the 90 days trading horizon Luckin Coffee is expected to generate 3.93 times less return on investment than Keck Seng. But when comparing it to its historical volatility, Luckin Coffee is 1.34 times less risky than Keck Seng. It trades about 0.02 of its potential returns per unit of risk. Keck Seng Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Keck Seng Investments on November 19, 2024 and sell it today you would earn a total of  16.00  from holding Keck Seng Investments or generate 133.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Luckin Coffee  vs.  Keck Seng Investments

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510152025
JavaScript chart by amCharts 3.21.15LC0A KEC
       Timeline  
Luckin Coffee 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 11 (%) 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb212223242526272829
Keck Seng Investments 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Keck Seng Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keck Seng reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.230.240.250.260.270.28

Luckin Coffee and Keck Seng Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.53-7.89-5.24-2.60.04412.755.548.3411.14 0.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15LC0A KEC
       Returns  

Pair Trading with Luckin Coffee and Keck Seng

The main advantage of trading using opposite Luckin Coffee and Keck Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, Keck Seng 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 Keck Seng will offset losses from the drop in Keck Seng's long position.
The idea behind Luckin Coffee and Keck Seng Investments 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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