Correlation Between U Power and Jeffs Brands

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

Diversification Opportunities for U Power and Jeffs Brands

0.81

Correlation Coefficient

U Power  Jeffs Brands

Very poor diversification

The 3 months correlation between UCAR and Jeffs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Jeffs Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeffs Brands 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 Jeffs Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeffs Brands has no effect on the direction of U Power i.e., U Power and Jeffs Brands go up and down completely randomly.

Pair Corralation between U Power and Jeffs Brands

Given the investment horizon of 90 days U Power Limited is expected to generate 1.92 times more return on investment than Jeffs Brands. However, U Power is 1.92 times more volatile than Jeffs Brands. It trades about -0.13 of its potential returns per unit of risk. Jeffs Brands is currently generating about -0.25 per unit of risk. If you would invest  663.00  in U Power Limited on December 27, 2024 and sell it today you would lose (397.00) from holding U Power Limited or give up 59.88% of portfolio value over 90 days.

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

U Power Limited  vs.  Jeffs Brands

U Power Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days U Power Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Jeffs Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeffs Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with U Power and Jeffs Brands

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

The idea behind U Power Limited and Jeffs Brands 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.