Correlation Between Lucid and OFX Group

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

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

Diversification Opportunities for Lucid and OFX Group

-0.86

Correlation Coefficient

Lucid  OFX Group

Pay attention - limited upside

The 3 months correlation between Lucid and OFX is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Lucid i.e., Lucid and OFX Group go up and down completely randomly.

Pair Corralation between Lucid and OFX Group

Given the investment horizon of 90 days Lucid Group is expected to under-perform the OFX Group. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 2.44 times less risky than OFX Group. The stock trades about -0.24 of its potential returns per unit of risk. The OFX Group Ltd is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  440.00  in OFX Group Ltd on August 30, 2024 and sell it today you would earn a total of  293.00  from holding OFX Group Ltd or generate 66.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

Lucid Group  vs.  OFX Group Ltd

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 unfluctuating performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

OFX Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lucid and OFX Group

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

The idea behind Lucid Group and OFX Group Ltd 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.