Correlation Between U Power and Vroom
Can any of the company-specific risk be diversified away by investing in both U Power and Vroom 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 Vroom 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 Vroom Inc, you can compare the effects of market volatilities on U Power and Vroom 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 Vroom. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Power and Vroom.
Diversification Opportunities for U Power and Vroom
Excellent diversification
The 3 months correlation between UCAR and Vroom is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding U Power Limited and Vroom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vroom 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 Vroom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vroom Inc has no effect on the direction of U Power i.e., U Power and Vroom go up and down completely randomly.
Pair Corralation between U Power and Vroom
Given the investment horizon of 90 days U Power Limited is expected to generate 1.85 times more return on investment than Vroom. However, U Power is 1.85 times more volatile than Vroom Inc. It trades about 0.25 of its potential returns per unit of risk. Vroom Inc is currently generating about -0.3 per unit of risk. If you would invest 700.00 in U Power Limited on October 20, 2024 and sell it today you would earn a total of 205.00 from holding U Power Limited or generate 29.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
U Power Limited vs. Vroom Inc
Performance |
| Timeline |
| U Power Limited |
| Vroom Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
U Power and Vroom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Power and Vroom
The main advantage of trading using opposite U Power and Vroom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Power position performs unexpectedly, Vroom 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 Vroom will offset losses from the drop in Vroom's long position.| U Power vs. Kaixin Auto Holdings | U Power vs. Uxin | U Power vs. SunCar Technology Group | U Power vs. Carvana Co |
| Vroom vs. CarMax Inc | Vroom vs. SunCar Technology Group | Vroom vs. U Power Limited | Vroom vs. Camping World Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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