Correlation Between STOAU and U Power

Can any of the company-specific risk be diversified away by investing in both STOAU and U Power 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 STOAU and U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STOAU 3649 29 APR 31 and U Power Limited, you can compare the effects of market volatilities on STOAU and U Power 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 STOAU with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of STOAU and U Power.

Diversification Opportunities for STOAU and U Power

0.13

Correlation Coefficient

STOAU  U Power

Average diversification

The 3 months correlation between STOAU and UCAR is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding STOAU 3649 29 APR 31 and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited and STOAU 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 STOAU 3649 29 APR 31 are associated (or correlated) with U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of STOAU i.e., STOAU and U Power go up and down completely randomly.

Pair Corralation between STOAU and U Power

Assuming the 90 days trading horizon STOAU 3649 29 APR 31 is expected to under-perform the U Power. In addition to that, STOAU is 1.05 times more volatile than U Power Limited. It trades about 0.0 of its total potential returns per unit of risk. U Power Limited is currently generating about 0.12 per unit of volatility. If you would invest  659.00  in U Power Limited on September 18, 2024 and sell it today you would earn a total of  49.00  from holding U Power Limited or generate 7.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

STOAU 3649 29 APR 31  vs.  U Power Limited

STOAU 3649 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STOAU 3649 29 APR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STOAU is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

U Power Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Power Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, U Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with STOAU and U Power

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

The idea behind STOAU 3649 29 APR 31 and U Power 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.