Correlation Between U Power and Powell Max

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

Diversification Opportunities for U Power and Powell Max

0.74

Correlation Coefficient

U Power  Powell Max

Poor diversification

The 3 months correlation between UCAR and Powell is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Powell Max Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Max Limited 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 Powell Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Max Limited has no effect on the direction of U Power i.e., U Power and Powell Max go up and down completely randomly.

Pair Corralation between U Power and Powell Max

Given the investment horizon of 90 days U Power Limited is expected to generate 0.75 times more return on investment than Powell Max. However, U Power Limited is 1.33 times less risky than Powell Max. It trades about -0.12 of its potential returns per unit of risk. Powell Max Limited is currently generating about -0.21 per unit of risk. If you would invest  638.00  in U Power Limited on December 20, 2024 and sell it today you would lose (371.00) from holding U Power Limited or give up 58.15% of portfolio value over 90 days.

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

U Power Limited  vs.  Powell Max Limited

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.

Powell Max Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powell Max Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with U Power and Powell Max

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

The idea behind U Power Limited and Powell Max Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.