Correlation Between U Power and Macys

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

Diversification Opportunities for U Power and Macys

-0.03

Correlation Coefficient

U Power  Macys

Good diversification

The 3 months correlation between UCAR and Macys is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of U Power i.e., U Power and Macys go up and down completely randomly.

Pair Corralation between U Power and Macys

Given the investment horizon of 90 days U Power Limited is expected to generate 18.84 times more return on investment than Macys. However, U Power is 18.84 times more volatile than Macys Inc. It trades about 0.03 of its potential returns per unit of risk. Macys Inc is currently generating about 0.06 per unit of risk. If you would invest  37,200  in U Power Limited on September 26, 2024 and sell it today you would lose (36,550) from holding U Power Limited or give up 98.25% 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.  Macys Inc

U Power Limited

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, U Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Macys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Power and Macys

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

The idea behind U Power Limited and Macys Inc 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.