Correlation Between U Power and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both U Power and CarsalesCom 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 CarsalesCom 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 CarsalesCom Ltd ADR, you can compare the effects of market volatilities on U Power and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and CarsalesCom.
Diversification Opportunities for U Power and CarsalesCom
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between UCAR and CarsalesCom is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of U Power i.e., U Power and CarsalesCom go up and down completely randomly.
Pair Corralation between U Power and CarsalesCom
Given the investment horizon of 90 days U Power Limited is expected to generate 26.76 times more return on investment than CarsalesCom. However, U Power is 26.76 times more volatile than CarsalesCom Ltd ADR. It trades about 0.05 of its potential returns per unit of risk. CarsalesCom Ltd ADR is currently generating about 0.09 per unit of risk. If you would invest 3,000 in U Power Limited on September 4, 2024 and sell it today you would lose (2,356) from holding U Power Limited or give up 78.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.26% |
| Values | Daily Returns |
U Power Limited vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| U Power Limited |
| CarsalesCom ADR |
U Power and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and CarsalesCom
The main advantage of trading using opposite U Power and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| U Power vs. Sonic Automotive | U Power vs. Lithia Motors | U Power vs. AutoNation | U Power vs. Penske Automotive Group |
| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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