Correlation Between Lucid and Alstom SA
Can any of the company-specific risk be diversified away by investing in both Lucid and Alstom SA 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 Alstom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Alstom SA, you can compare the effects of market volatilities on Lucid and Alstom SA 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 Alstom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Alstom SA.
Diversification Opportunities for Lucid and Alstom SA
Pay attention - limited upside
The 3 months correlation between Lucid and Alstom is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom SA 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 Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of Lucid i.e., Lucid and Alstom SA go up and down completely randomly.
Pair Corralation between Lucid and Alstom SA
Given the investment horizon of 90 days Lucid Group is expected to under-perform the Alstom SA. In addition to that, Lucid is 1.12 times more volatile than Alstom SA. It trades about -0.02 of its total potential returns per unit of risk. Alstom SA is currently generating about 0.03 per unit of volatility. If you would invest 2,184 in Alstom SA on September 12, 2024 and sell it today you would earn a total of 141.00 from holding Alstom SA or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Alstom SA
Performance |
| Timeline |
| Lucid Group |
| Alstom SA |
Lucid and Alstom SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Alstom SA
The main advantage of trading using opposite Lucid and Alstom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Alstom SA 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 Alstom SA will offset losses from the drop in Alstom SA's long position.The idea behind Lucid Group and Alstom SA 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.| Alstom SA vs. Westinghouse Air Brake | Alstom SA vs. Canadian Pacific Railway | Alstom SA vs. Trinity Industries | Alstom SA vs. CSX Corporation |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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