Correlation Between Consumer Automotive and U Power

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

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

Diversification Opportunities for Consumer Automotive and U Power

0.0

Correlation Coefficient

Consumer Automotive  U Power

Pay attention - limited upside

The 3 months correlation between Consumer and UCAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Automotive Finance 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 Consumer Automotive 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 Consumer Automotive Finance 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 Consumer Automotive i.e., Consumer Automotive and U Power go up and down completely randomly.

Pair Corralation between Consumer Automotive and U Power

If you would invest  0.01  in Consumer Automotive Finance on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Consumer Automotive Finance or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Consumer Automotive Finance  vs.  U Power Limited

Consumer Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Automotive Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Consumer Automotive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

U Power Limited

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, U Power is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Consumer Automotive and U Power

The main advantage of trading using opposite Consumer Automotive and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Automotive 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 Consumer Automotive Finance 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.