Correlation Between U Power and Ardelyx

Can any of the company-specific risk be diversified away by investing in both U Power and Ardelyx 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 Ardelyx 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 Ardelyx, you can compare the effects of market volatilities on U Power and Ardelyx 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 Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Ardelyx.

Diversification Opportunities for U Power and Ardelyx

0.28

Correlation Coefficient

U Power  Ardelyx

Modest diversification

The 3 months correlation between UCAR and Ardelyx is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx 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 Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of U Power i.e., U Power and Ardelyx go up and down completely randomly.

Pair Corralation between U Power and Ardelyx

Given the investment horizon of 90 days U Power Limited is expected to under-perform the Ardelyx. In addition to that, U Power is 1.25 times more volatile than Ardelyx. It trades about -0.05 of its total potential returns per unit of risk. Ardelyx is currently generating about 0.04 per unit of volatility. If you would invest  527.00  in Ardelyx on October 11, 2024 and sell it today you would earn a total of  7.00  from holding Ardelyx or generate 1.33% 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.  Ardelyx

U Power Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, U Power may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Ardelyx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with U Power and Ardelyx

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

The idea behind U Power Limited and Ardelyx 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.