Correlation Between Porsche Automobile and Lucid

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

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

Diversification Opportunities for Porsche Automobile and Lucid

-0.76

Correlation Coefficient

Porsche Automobile  Lucid

Pay attention - limited upside

The 3 months correlation between Porsche and Lucid is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobile Holding and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Porsche Automobile 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 Porsche Automobile Holding are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Porsche Automobile i.e., Porsche Automobile and Lucid go up and down completely randomly.

Pair Corralation between Porsche Automobile and Lucid

Assuming the 90 days horizon Porsche Automobile Holding is expected to generate 0.37 times more return on investment than Lucid. However, Porsche Automobile Holding is 2.68 times less risky than Lucid. It trades about 0.02 of its potential returns per unit of risk. Lucid Group is currently generating about -0.07 per unit of risk. If you would invest  377.00  in Porsche Automobile Holding on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Porsche Automobile Holding or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Porsche Automobile Holding  vs.  Lucid Group

Porsche Automobile

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Porsche Automobile Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Porsche Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Porsche Automobile and Lucid

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

The idea behind Porsche Automobile Holding and Lucid Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.