Correlation Between Lucid and U Power

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

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

Diversification Opportunities for Lucid and U Power

-0.21

Correlation Coefficient

Lucid  U Power

Very good diversification

The 3 months correlation between Lucid and UCAR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited 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 U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of Lucid i.e., Lucid and U Power go up and down completely randomly.

Pair Corralation between Lucid and U Power

Given the investment horizon of 90 days Lucid Group is expected to under-perform the U Power. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 13.62 times less risky than U Power. The stock trades about -0.01 of its potential returns per unit of risk. The U Power Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in U Power Limited on September 20, 2024 and sell it today you would earn a total of  665.00  from holding U Power Limited or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.88%
Values	Daily Returns

Lucid Group  vs.  U Power Limited

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

U Power Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, U Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lucid and U Power

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

The idea behind Lucid Group and U Power 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.