Correlation Between Lucid and Mahindra Mahindra

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

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

Diversification Opportunities for Lucid and Mahindra Mahindra

0.55

Correlation Coefficient

Lucid  Mahindra Mahindra

Very weak diversification

The 3 months correlation between Lucid and Mahindra is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Mahindra Mahindra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahindra Mahindra 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 Mahindra Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahindra Mahindra has no effect on the direction of Lucid i.e., Lucid and Mahindra Mahindra go up and down completely randomly.

Pair Corralation between Lucid and Mahindra Mahindra

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Mahindra Mahindra. In addition to that, Lucid is 1.33 times more volatile than Mahindra Mahindra Limited. It trades about -0.09 of its total potential returns per unit of risk. Mahindra Mahindra Limited is currently generating about -0.05 per unit of volatility. If you would invest  3,418  in Mahindra Mahindra Limited on December 21, 2024 and sell it today you would lose (393.00) from holding Mahindra Mahindra Limited or give up 11.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

Lucid Group  vs.  Mahindra Mahindra Limited

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 unfluctuating 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.

Mahindra Mahindra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mahindra Mahindra Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lucid and Mahindra Mahindra

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

The idea behind Lucid Group and Mahindra Mahindra Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.