Correlation Between Uber Technologies and WuXi AppTec

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

By analyzing existing cross correlation between Uber Technologies and WuXi AppTec Co, you can compare the effects of market volatilities on Uber Technologies and WuXi AppTec 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 Uber Technologies with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and WuXi AppTec.

Diversification Opportunities for Uber Technologies and WuXi AppTec

0.6

Correlation Coefficient

Uber Technologies  WuXi AppTec

Poor diversification

The 3 months correlation between Uber and WuXi is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and Uber Technologies 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 Uber Technologies are associated (or correlated) with WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Uber Technologies i.e., Uber Technologies and WuXi AppTec go up and down completely randomly.

Pair Corralation between Uber Technologies and WuXi AppTec

Given the investment horizon of 90 days Uber Technologies is expected to generate 1.19 times more return on investment than WuXi AppTec. However, Uber Technologies is 1.19 times more volatile than WuXi AppTec Co. It trades about 0.11 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.08 per unit of risk. If you would invest  6,123  in Uber Technologies on December 18, 2024 and sell it today you would earn a total of  976.00  from holding Uber Technologies or generate 15.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Uber Technologies  vs.  WuXi AppTec Co

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

WuXi AppTec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, WuXi AppTec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Uber Technologies and WuXi AppTec

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

The idea behind Uber Technologies and WuXi AppTec Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.