Correlation Between U Power and RBC Bearings

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

Diversification Opportunities for U Power and RBC Bearings

-0.78

Correlation Coefficient

U Power  RBC Bearings

Pay attention - limited upside

The 3 months correlation between UCAR and RBC is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of U Power i.e., U Power and RBC Bearings go up and down completely randomly.

Pair Corralation between U Power and RBC Bearings

Given the investment horizon of 90 days U Power Limited is expected to under-perform the RBC Bearings. In addition to that, U Power is 4.73 times more volatile than RBC Bearings Incorporated. It trades about -0.14 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about -0.13 per unit of volatility. If you would invest  36,364  in RBC Bearings Incorporated on December 10, 2024 and sell it today you would lose (1,063) from holding RBC Bearings Incorporated or give up 2.92% of portfolio value over 90 days.

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

U Power Limited  vs.  RBC Bearings Incorporated

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.

RBC Bearings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with U Power and RBC Bearings

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

The idea behind U Power Limited and RBC Bearings Incorporated 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.