Correlation Between U Power and Alignment Healthcare

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

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

Diversification Opportunities for U Power and Alignment Healthcare

0.27

Correlation Coefficient

U Power  Alignment Healthcare

Modest diversification

The 3 months correlation between UCAR and Alignment is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC and U Power 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 U Power Limited are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of U Power i.e., U Power and Alignment Healthcare go up and down completely randomly.

Pair Corralation between U Power and Alignment Healthcare

Given the investment horizon of 90 days U Power Limited is expected to generate 2.07 times more return on investment than Alignment Healthcare. However, U Power is 2.07 times more volatile than Alignment Healthcare LLC. It trades about 0.08 of its potential returns per unit of risk. Alignment Healthcare LLC is currently generating about -0.01 per unit of risk. If you would invest  714.00  in U Power Limited on October 9, 2024 and sell it today you would earn a total of  39.00  from holding U Power Limited or generate 5.46% return on investment over 90 days.

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

U Power Limited  vs.  Alignment Healthcare LLC

U Power Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 6 (%) 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.

Alignment Healthcare LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Alignment Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with U Power and Alignment Healthcare

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

The idea behind U Power Limited and Alignment Healthcare LLC 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.