Correlation Between Lucid and CCSB Financial

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

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

Diversification Opportunities for Lucid and CCSB Financial

-0.17

Correlation Coefficient

Lucid  CCSB Financial

Good diversification

The 3 months correlation between Lucid and CCSB is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and CCSB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCSB Financial Corp and Lucid 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 Lucid Group are associated (or correlated) with CCSB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCSB Financial Corp has no effect on the direction of Lucid i.e., Lucid and CCSB Financial go up and down completely randomly.

Pair Corralation between Lucid and CCSB Financial

Given the investment horizon of 90 days Lucid Group is expected to generate 2.74 times more return on investment than CCSB Financial. However, Lucid is 2.74 times more volatile than CCSB Financial Corp. It trades about 0.01 of its potential returns per unit of risk. CCSB Financial Corp is currently generating about -0.13 per unit of risk. If you would invest  342.00  in Lucid Group on October 6, 2024 and sell it today you would lose (13.00) from holding Lucid Group or give up 3.8% of portfolio value over 90 days.

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

Lucid Group  vs.  CCSB Financial Corp

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 rather sound forward indicators, Lucid is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

CCSB Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lucid and CCSB Financial

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

The idea behind Lucid Group and CCSB Financial Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.