Correlation Between Shake Shack and U Power
Can any of the company-specific risk be diversified away by investing in both Shake Shack 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 Shake Shack and U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and U Power Limited, you can compare the effects of market volatilities on Shake Shack 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 Shake Shack with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and U Power.
Diversification Opportunities for Shake Shack and U Power
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shake and UCAR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack 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 Shake Shack 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 Shake Shack 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 Shake Shack i.e., Shake Shack and U Power go up and down completely randomly.
Pair Corralation between Shake Shack and U Power
Given the investment horizon of 90 days Shake Shack is expected to generate 0.51 times more return on investment than U Power. However, Shake Shack is 1.97 times less risky than U Power. It trades about 0.17 of its potential returns per unit of risk. U Power Limited is currently generating about -0.21 per unit of risk. If you would invest 12,356 in Shake Shack on September 4, 2024 and sell it today you would earn a total of 993.00 from holding Shake Shack or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shake Shack vs. U Power Limited
Performance |
| Timeline |
| Shake Shack |
| U Power Limited |
Shake Shack and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and U Power
The main advantage of trading using opposite Shake Shack and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack 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.| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack vs. Wyndham Hotels Resorts |
| U Power vs. Sonic Automotive | U Power vs. Lithia Motors | U Power vs. AutoNation | U Power vs. Penske Automotive Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |