Correlation Between Wayfair and U Power

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

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

Diversification Opportunities for Wayfair and U Power

-0.16

Correlation Coefficient

Wayfair  U Power

Good diversification

The 3 months correlation between Wayfair and UCAR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair 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 Wayfair 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 Wayfair 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 Wayfair i.e., Wayfair and U Power go up and down completely randomly.

Pair Corralation between Wayfair and U Power

Taking into account the 90-day investment horizon Wayfair is expected to generate 22.72 times less return on investment than U Power. But when comparing it to its historical volatility, Wayfair is 14.72 times less risky than U Power. It trades about 0.03 of its potential returns per unit of risk. U Power Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in U Power Limited on September 26, 2024 and sell it today you would earn a total of  650.00  from holding U Power Limited or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.69%
Values	Daily Returns

Wayfair  vs.  U Power Limited

Wayfair

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wayfair has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 relatively invariable basic indicators, U Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wayfair and U Power

The main advantage of trading using opposite Wayfair and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayfair 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 Wayfair 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.