Correlation Between U Power and Primo Brands
Can any of the company-specific risk be diversified away by investing in both U Power and Primo Brands 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 Primo Brands 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 Primo Brands, you can compare the effects of market volatilities on U Power and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Primo Brands.
Diversification Opportunities for U Power and Primo Brands
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UCAR and Primo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of U Power i.e., U Power and Primo Brands go up and down completely randomly.
Pair Corralation between U Power and Primo Brands
Given the investment horizon of 90 days U Power Limited is expected to generate 2.76 times more return on investment than Primo Brands. However, U Power is 2.76 times more volatile than Primo Brands. It trades about 0.06 of its potential returns per unit of risk. Primo Brands is currently generating about 0.13 per unit of risk. If you would invest 515.00 in U Power Limited on September 3, 2024 and sell it today you would earn a total of 117.00 from holding U Power Limited or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. Primo Brands
Performance |
| Timeline |
| U Power Limited |
| Primo Brands |
U Power and Primo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Primo Brands
The main advantage of trading using opposite U Power and Primo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Primo Brands 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 Primo Brands will offset losses from the drop in Primo Brands' long position.| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
| Primo Brands vs. Aldel Financial II | Primo Brands vs. U Power Limited | Primo Brands vs. Xponential Fitness | Primo Brands vs. Emerson Radio |
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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