Correlation Between Lucid and ChampionX

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

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

Diversification Opportunities for Lucid and ChampionX

-0.44

Correlation Coefficient

Lucid  ChampionX

Very good diversification

The 3 months correlation between Lucid and ChampionX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Lucid i.e., Lucid and ChampionX go up and down completely randomly.

Pair Corralation between Lucid and ChampionX

Given the investment horizon of 90 days Lucid Group is expected to under-perform the ChampionX. In addition to that, Lucid is 3.56 times more volatile than ChampionX. It trades about -0.15 of its total potential returns per unit of risk. ChampionX is currently generating about 0.13 per unit of volatility. If you would invest  2,864  in ChampionX on December 2, 2024 and sell it today you would earn a total of  116.00  from holding ChampionX or generate 4.05% return on investment over 90 days.

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

Lucid Group  vs.  ChampionX

Lucid Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, Lucid exhibited solid returns over the last few months and may actually be approaching a breakup point.

ChampionX

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lucid and ChampionX

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

The idea behind Lucid Group and ChampionX 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.