Correlation Between U Power and Nascent Wine

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

Diversification Opportunities for U Power and Nascent Wine

-0.28

Correlation Coefficient

U Power  Nascent Wine

Very good diversification

The 3 months correlation between UCAR and Nascent is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Nascent Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nascent Wine 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 Nascent Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nascent Wine has no effect on the direction of U Power i.e., U Power and Nascent Wine go up and down completely randomly.

Pair Corralation between U Power and Nascent Wine

If you would invest  714.00  in U Power Limited on October 8, 2024 and sell it today you would earn a total of  83.00  from holding U Power Limited or generate 11.62% return on investment over 90 days.

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

U Power Limited  vs.  Nascent Wine

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.

Nascent Wine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nascent Wine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nascent Wine is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with U Power and Nascent Wine

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

The idea behind U Power Limited and Nascent Wine 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.