Correlation Between U Power and Caldas Gold

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

Diversification Opportunities for U Power and Caldas Gold

0.0

Correlation Coefficient

U Power  Caldas Gold

Pay attention - limited upside

The 3 months correlation between UCAR and Caldas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Caldas Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldas Gold 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 Caldas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldas Gold has no effect on the direction of U Power i.e., U Power and Caldas Gold go up and down completely randomly.

Pair Corralation between U Power and Caldas Gold

Given the investment horizon of 90 days U Power Limited is expected to generate 0.31 times more return on investment than Caldas Gold. However, U Power Limited is 3.18 times less risky than Caldas Gold. It trades about 0.06 of its potential returns per unit of risk. Caldas Gold is currently generating about -0.39 per unit of risk. If you would invest  540.00  in U Power Limited on October 9, 2024 and sell it today you would earn a total of  213.00  from holding U Power Limited or generate 39.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	3.64%
Values	Daily Returns

U Power Limited  vs.  Caldas Gold

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.

Caldas Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caldas Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Caldas Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with U Power and Caldas Gold

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

The idea behind U Power Limited and Caldas Gold 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.