Correlation Between Cango and U Power

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

By analyzing existing cross correlation between Cango Inc and U Power Limited, you can compare the effects of market volatilities on Cango and U Power 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 Cango with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cango and U Power.

Diversification Opportunities for Cango and U Power

0.55

Correlation Coefficient

Cango  U Power

Very weak diversification

The 3 months correlation between Cango and UCAR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cango Inc and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited and Cango 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 Cango Inc are associated (or correlated) with U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of Cango i.e., Cango and U Power go up and down completely randomly.

Pair Corralation between Cango and U Power

Given the investment horizon of 90 days Cango Inc is expected to generate 0.65 times more return on investment than U Power. However, Cango Inc is 1.53 times less risky than U Power. It trades about -0.04 of its potential returns per unit of risk. U Power Limited is currently generating about -0.13 per unit of risk. If you would invest  492.00  in Cango Inc on December 27, 2024 and sell it today you would lose (98.00) from holding Cango Inc or give up 19.92% of portfolio value over 90 days.

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

Cango Inc  vs.  U Power Limited

Cango Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cango Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

U Power Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days U Power Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cango and U Power

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

The idea behind Cango Inc and U Power Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.