Correlation Between U Power and BRP
Can any of the company-specific risk be diversified away by investing in both U Power and BRP 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 BRP 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 BRP Inc, you can compare the effects of market volatilities on U Power and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and BRP.
Diversification Opportunities for U Power and BRP
Very poor diversification
The 3 months correlation between UCAR and BRP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of U Power i.e., U Power and BRP go up and down completely randomly.
Pair Corralation between U Power and BRP
Given the investment horizon of 90 days U Power Limited is expected to under-perform the BRP. In addition to that, U Power is 3.16 times more volatile than BRP Inc. It trades about -0.14 of its total potential returns per unit of risk. BRP Inc is currently generating about -0.41 per unit of volatility. If you would invest 5,279 in BRP Inc on November 28, 2024 and sell it today you would lose (1,239) from holding BRP Inc or give up 23.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. BRP Inc
Performance |
| Timeline |
| U Power Limited |
| BRP Inc |
U Power and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and BRP
The main advantage of trading using opposite U Power and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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