Correlation Between UCloud Technology and China Life

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

By analyzing existing cross correlation between UCloud Technology Co and China Life Insurance, you can compare the effects of market volatilities on UCloud Technology and China Life 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 UCloud Technology with a short position of China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCloud Technology and China Life.

Diversification Opportunities for UCloud Technology and China Life

-0.11

Correlation Coefficient

UCloud Technology  China Life

Good diversification

The 3 months correlation between UCloud and China is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding UCloud Technology Co and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and UCloud Technology 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 UCloud Technology Co are associated (or correlated) with China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of UCloud Technology i.e., UCloud Technology and China Life go up and down completely randomly.

Pair Corralation between UCloud Technology and China Life

Assuming the 90 days trading horizon UCloud Technology Co is expected to generate 3.9 times more return on investment than China Life. However, UCloud Technology is 3.9 times more volatile than China Life Insurance. It trades about 0.18 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.11 per unit of risk. If you would invest  1,453  in UCloud Technology Co on December 25, 2024 and sell it today you would earn a total of  1,206  from holding UCloud Technology Co or generate 83.0% return on investment over 90 days.

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

UCloud Technology Co  vs.  China Life Insurance

UCloud Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UCloud Technology Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UCloud Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

China Life Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with UCloud Technology and China Life

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

The idea behind UCloud Technology Co and China Life Insurance 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.