Correlation Between CarsalesCom and Lucid

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

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

Diversification Opportunities for CarsalesCom and Lucid

-0.24

Correlation Coefficient

CarsalesCom  Lucid

Very good diversification

The 3 months correlation between CarsalesCom and Lucid is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and CarsalesCom 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 CarsalesCom Ltd ADR 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 CarsalesCom i.e., CarsalesCom and Lucid go up and down completely randomly.

Pair Corralation between CarsalesCom and Lucid

Assuming the 90 days horizon CarsalesCom is expected to generate 2.5 times less return on investment than Lucid. But when comparing it to its historical volatility, CarsalesCom Ltd ADR is 1.69 times less risky than Lucid. It trades about 0.23 of its potential returns per unit of risk. Lucid Group is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Lucid Group on September 20, 2024 and sell it today you would earn a total of  66.00  from holding Lucid Group or generate 31.43% return on investment over 90 days.

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

CarsalesCom Ltd ADR  vs.  Lucid Group

CarsalesCom ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom Ltd ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, CarsalesCom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lucid Group

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CarsalesCom and Lucid

The main advantage of trading using opposite CarsalesCom and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom 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 CarsalesCom Ltd ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.