Correlation Between Lucid and VitruLtd

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

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

Diversification Opportunities for Lucid and VitruLtd

-0.52

Correlation Coefficient

Lucid  VitruLtd

Excellent diversification

The 3 months correlation between Lucid and VitruLtd is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and VitruLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VitruLtd 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 VitruLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VitruLtd has no effect on the direction of Lucid i.e., Lucid and VitruLtd go up and down completely randomly.

Pair Corralation between Lucid and VitruLtd

Given the investment horizon of 90 days Lucid Group is expected to under-perform the VitruLtd. In addition to that, Lucid is 1.15 times more volatile than VitruLtd. It trades about -0.16 of its total potential returns per unit of risk. VitruLtd is currently generating about -0.12 per unit of volatility. If you would invest  1,475  in VitruLtd on January 16, 2024 and sell it today you would lose (119.00) from holding VitruLtd or give up 8.07% of portfolio value over 90 days.

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

Lucid Group  vs.  VitruLtd

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

VitruLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VitruLtd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VitruLtd is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lucid and VitruLtd

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

The idea behind Lucid Group and VitruLtd 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.