Correlation Between Yuexiu Transport and Lucid

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

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

Diversification Opportunities for Yuexiu Transport and Lucid

-0.75

Correlation Coefficient

Yuexiu Transport  Lucid

Pay attention - limited upside

The 3 months correlation between Yuexiu and Lucid is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Yuexiu Transport 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 Yuexiu Transport Infrastructure 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 Yuexiu Transport i.e., Yuexiu Transport and Lucid go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Lucid

Assuming the 90 days horizon Yuexiu Transport is expected to generate 1.25 times less return on investment than Lucid. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 2.28 times less risky than Lucid. It trades about 0.09 of its potential returns per unit of risk. Lucid Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Lucid Group on September 24, 2024 and sell it today you would earn a total of  50.50  from holding Lucid Group or generate 19.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Yuexiu Transport Infrastructur  vs.  Lucid Group

Yuexiu Transport Inf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Yuexiu Transport reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Yuexiu Transport and Lucid

The main advantage of trading using opposite Yuexiu Transport and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport 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 Yuexiu Transport Infrastructure 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.