Correlation Between SEI INVESTMENTS and Luckin Coffee

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

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

Diversification Opportunities for SEI INVESTMENTS and Luckin Coffee

0.54

Correlation Coefficient

SEI INVESTMENTS  Luckin Coffee

Very weak diversification

The 3 months correlation between SEI and Luckin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SEI INVESTMENTS and Luckin Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luckin Coffee and SEI INVESTMENTS 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 SEI INVESTMENTS are associated (or correlated) with Luckin Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luckin Coffee has no effect on the direction of SEI INVESTMENTS i.e., SEI INVESTMENTS and Luckin Coffee go up and down completely randomly.

Pair Corralation between SEI INVESTMENTS and Luckin Coffee

Assuming the 90 days trading horizon SEI INVESTMENTS is expected to generate 0.37 times more return on investment than Luckin Coffee. However, SEI INVESTMENTS is 2.71 times less risky than Luckin Coffee. It trades about 0.2 of its potential returns per unit of risk. Luckin Coffee is currently generating about 0.07 per unit of risk. If you would invest  6,910  in SEI INVESTMENTS on April 25, 2025 and sell it today you would earn a total of  990.00  from holding SEI INVESTMENTS or generate 14.33% return on investment over 90 days.

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

SEI INVESTMENTS  vs.  Luckin Coffee

SEI INVESTMENTS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI INVESTMENTS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEI INVESTMENTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Luckin Coffee

Risk-Adjusted Performance

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 uncertain basic indicators, Luckin Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEI INVESTMENTS and Luckin Coffee

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

The idea behind SEI INVESTMENTS and Luckin Coffee 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.