Correlation Between U Power and Kingsway Financial

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

Diversification Opportunities for U Power and Kingsway Financial

0.65

Correlation Coefficient

U Power  Kingsway Financial

Poor diversification

The 3 months correlation between UCAR and Kingsway is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of U Power i.e., U Power and Kingsway Financial go up and down completely randomly.

Pair Corralation between U Power and Kingsway Financial

Given the investment horizon of 90 days U Power Limited is expected to generate 35.61 times more return on investment than Kingsway Financial. However, U Power is 35.61 times more volatile than Kingsway Financial Services. It trades about 0.06 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about 0.0 per unit of risk. If you would invest  6.20  in U Power Limited on December 28, 2024 and sell it today you would earn a total of  246.80  from holding U Power Limited or generate 3980.65% return on investment over 90 days.

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

U Power Limited  vs.  Kingsway Financial Services

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.

Kingsway Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kingsway Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with U Power and Kingsway Financial

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

The idea behind U Power Limited and Kingsway Financial Services 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.