Correlation Between U Power and Li Auto
Can any of the company-specific risk be diversified away by investing in both U Power and Li Auto 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 Li Auto 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 Li Auto, you can compare the effects of market volatilities on U Power and Li Auto 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 Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Li Auto.
Diversification Opportunities for U Power and Li Auto
Very weak diversification
The 3 months correlation between UCAR and Li Auto is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto 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 Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of U Power i.e., U Power and Li Auto go up and down completely randomly.
Pair Corralation between U Power and Li Auto
Given the investment horizon of 90 days U Power Limited is expected to under-perform the Li Auto. In addition to that, U Power is 1.43 times more volatile than Li Auto. It trades about -0.22 of its total potential returns per unit of risk. Li Auto is currently generating about -0.06 per unit of volatility. If you would invest 2,501 in Li Auto on September 1, 2024 and sell it today you would lose (133.00) from holding Li Auto or give up 5.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. Li Auto
Performance |
| Timeline |
| U Power Limited |
| Li Auto |
U Power and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Li Auto
The main advantage of trading using opposite U Power and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto's long position.| U Power vs. Advance Auto Parts | U Power vs. Tractor Supply | U Power vs. Genuine Parts Co | U Power vs. Five Below |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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