Correlation Between U Power and United Homes
Can any of the company-specific risk be diversified away by investing in both U Power and United Homes 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 United Homes 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 United Homes Group, you can compare the effects of market volatilities on U Power and United Homes 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 United Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and United Homes.
Diversification Opportunities for U Power and United Homes
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between UCAR and United is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes Group 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of U Power i.e., U Power and United Homes go up and down completely randomly.
Pair Corralation between U Power and United Homes
Given the investment horizon of 90 days U Power Limited is expected to generate 15.53 times more return on investment than United Homes. However, U Power is 15.53 times more volatile than United Homes Group. It trades about 0.05 of its potential returns per unit of risk. United Homes Group is currently generating about -0.02 per unit of risk. If you would invest 2,450 in U Power Limited on September 12, 2024 and sell it today you would lose (1,702) from holding U Power Limited or give up 69.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Power Limited vs. United Homes Group
Performance |
| Timeline |
| U Power Limited |
| United Homes Group |
U Power and United Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and United Homes
The main advantage of trading using opposite U Power and United Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, United Homes 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 United Homes will offset losses from the drop in United Homes' long position.| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
| United Homes vs. Boyd Gaming | United Homes vs. The Mosaic | United Homes vs. Avient Corp | United Homes vs. Meli Hotels International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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