Correlation Between Critical Metals and U Power

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

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

Diversification Opportunities for Critical Metals and U Power

0.21

Correlation Coefficient

Critical Metals  U Power

Modest diversification

The 3 months correlation between Critical and UCAR is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Critical Metals Corp 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 Critical Metals 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 Critical Metals Corp 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 Critical Metals i.e., Critical Metals and U Power go up and down completely randomly.

Pair Corralation between Critical Metals and U Power

Given the investment horizon of 90 days Critical Metals Corp is expected to generate 1.03 times more return on investment than U Power. However, Critical Metals is 1.03 times more volatile than U Power Limited. It trades about 0.11 of its potential returns per unit of risk. U Power Limited is currently generating about 0.1 per unit of risk. If you would invest  652.00  in Critical Metals Corp on October 24, 2024 and sell it today you would earn a total of  198.00  from holding Critical Metals Corp or generate 30.37% return on investment over 90 days.

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

Critical Metals Corp  vs.  U Power Limited

Critical Metals Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

U Power Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, U Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Critical Metals and U Power

The main advantage of trading using opposite Critical Metals and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Metals 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 Critical Metals Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.