Correlation Between U Power and CarMax
Can any of the company-specific risk be diversified away by investing in both U Power and CarMax 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 CarMax 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 CarMax Inc, you can compare the effects of market volatilities on U Power and CarMax 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 CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and CarMax.
Diversification Opportunities for U Power and CarMax
Very good diversification
The 3 months correlation between UCAR and CarMax is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax 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 CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of U Power i.e., U Power and CarMax go up and down completely randomly.
Pair Corralation between U Power and CarMax
Given the investment horizon of 90 days U Power Limited is expected to under-perform the CarMax. In addition to that, U Power is 2.39 times more volatile than CarMax Inc. It trades about -0.05 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.28 per unit of volatility. If you would invest 7,200 in CarMax Inc on August 24, 2024 and sell it today you would earn a total of 863.00 from holding CarMax Inc or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. CarMax Inc
Performance |
| Timeline |
| U Power Limited |
| CarMax Inc |
U Power and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and CarMax
The main advantage of trading using opposite U Power and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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