Correlation Between U Power and National Beverage
Can any of the company-specific risk be diversified away by investing in both U Power and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on U Power and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and National Beverage.
Diversification Opportunities for U Power and National Beverage
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between UCAR and National is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of U Power i.e., U Power and National Beverage go up and down completely randomly.
Pair Corralation between U Power and National Beverage
Given the investment horizon of 90 days U Power Limited is expected to generate 34.68 times more return on investment than National Beverage. However, U Power is 34.68 times more volatile than National Beverage Corp. It trades about 0.05 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.04 per unit of risk. If you would invest 3,900 in U Power Limited on September 3, 2024 and sell it today you would lose (3,268) from holding U Power Limited or give up 83.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. National Beverage Corp
Performance |
| Timeline |
| U Power Limited |
| National Beverage Corp |
U Power and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and National Beverage
The main advantage of trading using opposite U Power and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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