Correlation Between Xpeng and Lucid
Can any of the company-specific risk be diversified away by investing in both Xpeng 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 Xpeng and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xpeng Inc and Lucid Group, you can compare the effects of market volatilities on Xpeng 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 Xpeng with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xpeng and Lucid.
Diversification Opportunities for Xpeng and Lucid
Good diversification
The 3 months correlation between Xpeng and Lucid is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Xpeng Inc and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Xpeng 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 Xpeng Inc 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 Xpeng i.e., Xpeng and Lucid go up and down completely randomly.
Pair Corralation between Xpeng and Lucid
Given the investment horizon of 90 days Xpeng Inc is expected to generate 0.92 times more return on investment than Lucid. However, Xpeng Inc is 1.09 times less risky than Lucid. It trades about 0.06 of its potential returns per unit of risk. Lucid Group is currently generating about 0.03 per unit of risk. If you would invest 920.00 in Xpeng Inc on October 20, 2024 and sell it today you would earn a total of 493.00 from holding Xpeng Inc or generate 53.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xpeng Inc vs. Lucid Group
Performance |
| Timeline |
| Xpeng Inc |
| Lucid Group |
Xpeng and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xpeng and Lucid
The main advantage of trading using opposite Xpeng and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpeng 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 Xpeng Inc 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.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |