Correlation Between Lincoln National and U Power

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

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

Diversification Opportunities for Lincoln National and U Power

0.07

Correlation Coefficient

Lincoln National  U Power

Significant diversification

The 3 months correlation between Lincoln and UCAR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National 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 Lincoln National 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 Lincoln National 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 Lincoln National i.e., Lincoln National and U Power go up and down completely randomly.

Pair Corralation between Lincoln National and U Power

Assuming the 90 days trading horizon Lincoln National is expected to under-perform the U Power. But the preferred stock apears to be less risky and, when comparing its historical volatility, Lincoln National is 7.73 times less risky than U Power. The preferred stock trades about -0.06 of its potential returns per unit of risk. The U Power Limited is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  660.00  in U Power Limited on October 23, 2024 and sell it today you would earn a total of  245.00  from holding U Power Limited or generate 37.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Lincoln National  vs.  U Power Limited

Lincoln National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lincoln National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lincoln National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

U Power Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 8 (%) 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 Lincoln National and U Power

The main advantage of trading using opposite Lincoln National and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National 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 Lincoln National 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..