Correlation Between Lucid and Geely Automobile

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

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

Diversification Opportunities for Lucid and Geely Automobile

-0.44

Correlation Coefficient

Lucid  Geely Automobile

Very good diversification

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

Pair Corralation between Lucid and Geely Automobile

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Geely Automobile. In addition to that, Lucid is 1.23 times more volatile than Geely Automobile Holdings. It trades about -0.07 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.09 per unit of volatility. If you would invest  191.00  in Geely Automobile Holdings on December 28, 2024 and sell it today you would earn a total of  34.00  from holding Geely Automobile Holdings or generate 17.8% 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.  Geely Automobile Holdings

Lucid Group

Risk-Adjusted Performance

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

Geely Automobile Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lucid and Geely Automobile

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

The idea behind Lucid Group and Geely Automobile Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.