Correlation Between U Power and Boston Beer
Can any of the company-specific risk be diversified away by investing in both U Power and Boston Beer 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 Boston Beer 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 Boston Beer, you can compare the effects of market volatilities on U Power and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Boston Beer.
Diversification Opportunities for U Power and Boston Beer
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UCAR and Boston is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of U Power i.e., U Power and Boston Beer go up and down completely randomly.
Pair Corralation between U Power and Boston Beer
Given the investment horizon of 90 days U Power Limited is expected to under-perform the Boston Beer. In addition to that, U Power is 4.07 times more volatile than Boston Beer. It trades about -0.22 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.34 per unit of volatility. If you would invest 29,107 in Boston Beer on September 1, 2024 and sell it today you would earn a total of 2,517 from holding Boston Beer or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. Boston Beer
Performance |
| Timeline |
| U Power Limited |
| Boston Beer |
U Power and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Boston Beer
The main advantage of trading using opposite U Power and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer'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 |
| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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