Correlation Between Lucid and DIH Holdings

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

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

Diversification Opportunities for Lucid and DIH Holdings

0.44

Correlation Coefficient

Lucid  DIH Holdings

Very weak diversification

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

Pair Corralation between Lucid and DIH Holdings

Given the investment horizon of 90 days Lucid Group is expected to under-perform the DIH Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 2.11 times less risky than DIH Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The DIH Holdings US, is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  160.00  in DIH Holdings US, on October 23, 2024 and sell it today you would lose (45.00) from holding DIH Holdings US, or give up 28.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	48.28%
Values	Daily Returns

Lucid Group  vs.  DIH Holdings US,

Lucid Group

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lucid Group are ranked lower than 5 (%) 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.

DIH Holdings US,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DIH Holdings US, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, DIH Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lucid and DIH Holdings

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

The idea behind Lucid Group and DIH Holdings US, 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.