Correlation Between U Power and Tesla
Can any of the company-specific risk be diversified away by investing in both U Power and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on U Power and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Tesla.
Diversification Opportunities for U Power and Tesla
Good diversification
The 3 months correlation between UCAR and Tesla is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of U Power i.e., U Power and Tesla go up and down completely randomly.
Pair Corralation between U Power and Tesla
Given the investment horizon of 90 days U Power Limited is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, U Power Limited is 1.05 times less risky than Tesla. The stock trades about -0.18 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 24,898 in Tesla Inc on September 2, 2024 and sell it today you would earn a total of 9,618 from holding Tesla Inc or generate 38.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. Tesla Inc
Performance |
| Timeline |
| U Power Limited |
| Tesla Inc |
U Power and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Tesla
The main advantage of trading using opposite U Power and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla'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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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