Correlation Between Lucid and Carmell Therapeutics
Can any of the company-specific risk be diversified away by investing in both Lucid and Carmell Therapeutics 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 Carmell Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Carmell Therapeutics, you can compare the effects of market volatilities on Lucid and Carmell Therapeutics 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 Carmell Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Carmell Therapeutics.
Diversification Opportunities for Lucid and Carmell Therapeutics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lucid and Carmell is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Carmell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmell Therapeutics 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 Carmell Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmell Therapeutics has no effect on the direction of Lucid i.e., Lucid and Carmell Therapeutics go up and down completely randomly.
Pair Corralation between Lucid and Carmell Therapeutics
Given the investment horizon of 90 days Lucid is expected to generate 4.12 times less return on investment than Carmell Therapeutics. But when comparing it to its historical volatility, Lucid Group is 6.61 times less risky than Carmell Therapeutics. It trades about 0.29 of its potential returns per unit of risk. Carmell Therapeutics is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Carmell Therapeutics on October 9, 2024 and sell it today you would earn a total of 21.00 from holding Carmell Therapeutics or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Carmell Therapeutics
Performance |
| Timeline |
| Lucid Group |
| Carmell Therapeutics |
Lucid and Carmell Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Carmell Therapeutics
The main advantage of trading using opposite Lucid and Carmell Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Carmell Therapeutics 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 Carmell Therapeutics will offset losses from the drop in Carmell Therapeutics' long position.The idea behind Lucid Group and Carmell Therapeutics 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.| Carmell Therapeutics vs. Hollywood Intermediate | Carmell Therapeutics vs. Aquestive Therapeutics | Carmell Therapeutics vs. Sonos Inc | Carmell Therapeutics vs. Avadel Pharmaceuticals PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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