Correlation Between Lucid and Hyzon Motors

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

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

Diversification Opportunities for Lucid and Hyzon Motors

0.88

Correlation Coefficient

Lucid  Hyzon Motors

Very poor diversification

The 3 months correlation between Lucid and Hyzon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors 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 Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Lucid i.e., Lucid and Hyzon Motors go up and down completely randomly.

Pair Corralation between Lucid and Hyzon Motors

Given the investment horizon of 90 days Lucid Group is expected to generate 0.61 times more return on investment than Hyzon Motors. However, Lucid Group is 1.63 times less risky than Hyzon Motors. It trades about -0.03 of its potential returns per unit of risk. Hyzon Motors is currently generating about -0.05 per unit of risk. If you would invest  755.00  in Lucid Group on September 14, 2024 and sell it today you would lose (501.00) from holding Lucid Group or give up 66.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Lucid Group  vs.  Hyzon Motors

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 weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hyzon Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyzon Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Lucid and Hyzon Motors

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

The idea behind Lucid Group and Hyzon Motors 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.