Correlation Between U Power and 126650CX6

Can any of the company-specific risk be diversified away by investing in both U Power and 126650CX6 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 126650CX6 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 CVS HEALTH P, you can compare the effects of market volatilities on U Power and 126650CX6 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 126650CX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and 126650CX6.

Diversification Opportunities for U Power and 126650CX6

-0.32

Correlation Coefficient

U Power  126650CX6

Very good diversification

The 3 months correlation between UCAR and 126650CX6 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and CVS HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH P 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 126650CX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH P has no effect on the direction of U Power i.e., U Power and 126650CX6 go up and down completely randomly.

Pair Corralation between U Power and 126650CX6

Given the investment horizon of 90 days U Power Limited is expected to under-perform the 126650CX6. In addition to that, U Power is 6.25 times more volatile than CVS HEALTH P. It trades about -0.02 of its total potential returns per unit of risk. CVS HEALTH P is currently generating about 0.0 per unit of volatility. If you would invest  9,901  in CVS HEALTH P on August 31, 2024 and sell it today you would lose (21.00) from holding CVS HEALTH P or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

U Power Limited  vs.  CVS HEALTH P

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 latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CVS HEALTH P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS HEALTH P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126650CX6 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with U Power and 126650CX6

The main advantage of trading using opposite U Power and 126650CX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, 126650CX6 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 126650CX6 will offset losses from the drop in 126650CX6's long position.

The idea behind U Power Limited and CVS HEALTH P 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.