Correlation Between U Power and Shake Shack
Can any of the company-specific risk be diversified away by investing in both U Power and Shake Shack 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 Shake Shack 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 Shake Shack, you can compare the effects of market volatilities on U Power and Shake Shack 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 Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Shake Shack.
Diversification Opportunities for U Power and Shake Shack
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UCAR and Shake is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack 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 Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of U Power i.e., U Power and Shake Shack go up and down completely randomly.
Pair Corralation between U Power and Shake Shack
Given the investment horizon of 90 days U Power Limited is expected to under-perform the Shake Shack. In addition to that, U Power is 1.97 times more volatile than Shake Shack. It trades about -0.21 of its total potential returns per unit of risk. Shake Shack is currently generating about 0.17 per unit of volatility. If you would invest 12,356 in Shake Shack on September 4, 2024 and sell it today you would earn a total of 993.00 from holding Shake Shack or generate 8.04% 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. Shake Shack
Performance |
| Timeline |
| U Power Limited |
| Shake Shack |
U Power and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Shake Shack
The main advantage of trading using opposite U Power and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack's long position.| U Power vs. Sonic Automotive | U Power vs. Lithia Motors | U Power vs. AutoNation | U Power vs. Penske Automotive Group |
| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack vs. Wyndham Hotels Resorts |
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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