Correlation Between U Power and Magna International
Can any of the company-specific risk be diversified away by investing in both U Power and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on U Power and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Magna International.
Diversification Opportunities for U Power and Magna International
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UCAR and Magna is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of U Power i.e., U Power and Magna International go up and down completely randomly.
Pair Corralation between U Power and Magna International
Given the investment horizon of 90 days U Power Limited is expected to under-perform the Magna International. In addition to that, U Power is 1.88 times more volatile than Magna International. It trades about -0.22 of its total potential returns per unit of risk. Magna International is currently generating about 0.19 per unit of volatility. If you would invest 4,250 in Magna International on August 28, 2024 and sell it today you would earn a total of 396.00 from holding Magna International or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
U Power Limited vs. Magna International
Performance |
| Timeline |
| U Power Limited |
| Magna International |
U Power and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Magna International
The main advantage of trading using opposite U Power and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| U Power vs. Kingsway Financial Services | U Power vs. KAR Auction Services | U Power vs. Cango Inc | U Power vs. Vroom Inc |
| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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