Correlation Between U Power and Fortrea Holdings

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

Diversification Opportunities for U Power and Fortrea Holdings

-0.39

Correlation Coefficient

U Power  Fortrea Holdings

Very good diversification

The 3 months correlation between UCAR and Fortrea is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea Holdings 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 Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of U Power i.e., U Power and Fortrea Holdings go up and down completely randomly.

Pair Corralation between U Power and Fortrea Holdings

Given the investment horizon of 90 days U Power Limited is expected to generate 1.65 times more return on investment than Fortrea Holdings. However, U Power is 1.65 times more volatile than Fortrea Holdings. It trades about -0.05 of its potential returns per unit of risk. Fortrea Holdings is currently generating about -0.18 per unit of risk. If you would invest  720.00  in U Power Limited on October 11, 2024 and sell it today you would lose (60.00) from holding U Power Limited or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

U Power Limited  vs.  Fortrea Holdings

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.

Fortrea Holdings

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with U Power and Fortrea Holdings

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

The idea behind U Power Limited and Fortrea Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.