Correlation Between Polestar Automotive and Lucid

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

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

Diversification Opportunities for Polestar Automotive and Lucid

-0.04

Correlation Coefficient

Polestar Automotive  Lucid

Good diversification

The 3 months correlation between Polestar and Lucid is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Polestar Automotive 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 Polestar Automotive 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 Polestar Automotive i.e., Polestar Automotive and Lucid go up and down completely randomly.

Pair Corralation between Polestar Automotive and Lucid

Given the investment horizon of 90 days Polestar Automotive Holding is expected to generate 0.78 times more return on investment than Lucid. However, Polestar Automotive Holding is 1.28 times less risky than Lucid. It trades about 0.02 of its potential returns per unit of risk. Lucid Group is currently generating about -0.08 per unit of risk. If you would invest  107.00  in Polestar Automotive Holding on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Polestar Automotive Holding or generate 0.93% return on investment over 90 days.

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

Polestar Automotive Holding  vs.  Lucid Group

Polestar Automotive

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Polestar Automotive Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Polestar Automotive is not utilizing all of its potentials. The latest 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 Polestar Automotive and Lucid

The main advantage of trading using opposite Polestar Automotive and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive 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 Polestar Automotive 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.