Correlation Between Williams Sonoma and U Power

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

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

Diversification Opportunities for Williams Sonoma and U Power

0.18

Correlation Coefficient

Williams Sonoma  U Power

Average diversification

The 3 months correlation between Williams and UCAR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma 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 Williams Sonoma 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 Williams Sonoma 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 Williams Sonoma i.e., Williams Sonoma and U Power go up and down completely randomly.

Pair Corralation between Williams Sonoma and U Power

Considering the 90-day investment horizon Williams Sonoma is expected to generate 0.28 times more return on investment than U Power. However, Williams Sonoma is 3.57 times less risky than U Power. It trades about -0.09 of its potential returns per unit of risk. U Power Limited is currently generating about -0.14 per unit of risk. If you would invest  18,598  in Williams Sonoma on December 28, 2024 and sell it today you would lose (2,700) from holding Williams Sonoma or give up 14.52% of portfolio value over 90 days.

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

Williams Sonoma  vs.  U Power Limited

Williams Sonoma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Williams Sonoma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Williams Sonoma and U Power

The main advantage of trading using opposite Williams Sonoma and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Williams Sonoma 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 Williams Sonoma 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.