Correlation Between Aptiv PLC and Lucid

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

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

Diversification Opportunities for Aptiv PLC and Lucid

-0.23

Correlation Coefficient

Aptiv PLC  Lucid

Very good diversification

The 3 months correlation between Aptiv and Lucid is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Lucid go up and down completely randomly.

Pair Corralation between Aptiv PLC and Lucid

Given the investment horizon of 90 days Aptiv PLC is expected to generate 0.36 times more return on investment than Lucid. However, Aptiv PLC is 2.8 times less risky than Lucid. It trades about 0.04 of its potential returns per unit of risk. Lucid Group is currently generating about -0.07 per unit of risk. If you would invest  6,011  in Aptiv PLC on December 28, 2024 and sell it today you would earn a total of  214.00  from holding Aptiv PLC or generate 3.56% return on investment over 90 days.

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

Aptiv PLC  vs.  Lucid Group

Aptiv PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptiv PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Aptiv PLC is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lucid Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucid Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aptiv PLC and Lucid

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

The idea behind Aptiv PLC and Lucid Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.