Correlation Between Verde Clean and Lucid

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

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

Diversification Opportunities for Verde Clean and Lucid

-0.2

Correlation Coefficient

Verde Clean  Lucid

Good diversification

The 3 months correlation between Verde and Lucid is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Verde Clean 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 Verde Clean Fuels 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 Verde Clean i.e., Verde Clean and Lucid go up and down completely randomly.

Pair Corralation between Verde Clean and Lucid

Assuming the 90 days horizon Verde Clean Fuels is expected to generate 2.15 times more return on investment than Lucid. However, Verde Clean is 2.15 times more volatile than Lucid Group. It trades about 0.08 of its potential returns per unit of risk. Lucid Group is currently generating about -0.01 per unit of risk. If you would invest  25.00  in Verde Clean Fuels on December 19, 2024 and sell it today you would earn a total of  5.00  from holding Verde Clean Fuels or generate 20.0% return on investment over 90 days.

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

Verde Clean Fuels  vs.  Lucid Group

Verde Clean Fuels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Verde Clean showed solid returns over the last few months and may actually be approaching a breakup point.

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 rather sound forward indicators, Lucid is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Verde Clean and Lucid

The main advantage of trading using opposite Verde Clean and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verde Clean 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 Verde Clean Fuels 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.