Correlation Between Lucid and Fresh Harvest

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Can any of the company-specific risk be diversified away by investing in both Lucid and Fresh Harvest 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 Fresh Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Fresh Harvest Products, you can compare the effects of market volatilities on Lucid and Fresh Harvest 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 Fresh Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Fresh Harvest.

Diversification Opportunities for Lucid and Fresh Harvest

-0.21
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Lucid and Fresh Harvest

Given the investment horizon of 90 days Lucid Group is expected to under-perform the Fresh Harvest. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 9.32 times less risky than Fresh Harvest. The stock trades about -0.05 of its potential returns per unit of risk. The Fresh Harvest Products is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Fresh Harvest Products on December 29, 2023 and sell it today you would lose (142.00) from holding Fresh Harvest Products or give up 73.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lucid Group  vs.  Fresh Harvest Products

 Performance 
       Timeline  
Lucid Group 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Harvest Products are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Fresh Harvest demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lucid and Fresh Harvest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lucid and Fresh Harvest

The main advantage of trading using opposite Lucid and Fresh Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Fresh Harvest 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 Fresh Harvest will offset losses from the drop in Fresh Harvest's long position.
The idea behind Lucid Group and Fresh Harvest Products 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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